Stocks in focus: Ruchit Jain of 5paisa recommends buying ONGC, and HUL this week

Stock Market News: Tuesday saw an overall drop in the domesticbenchmark indices, Sensex and Nifty 50, led by HDFC Bank. This decline was probably caused by lower-than-expected inflows as a result of a staggered weight adjustment on a major global stock index, as well as an increase in broad-based selling pressure.

The Sensex fell 0.87% to 78,956.03, while the Nifty 50 index dropped 0.85% to 24,139.

The heaviest stock in the Nifty 50, HDFC Bank, the largest private lender in India, down 3.4% and spearheaded the index's losses.

The global index provider MSCI increased the percentage of HDFC Bank's shares that foreign investors may buy, but it also stated that the modifications will take effect in two phases—in August and November—instead of the one step that the market had anticipated this month.

According to Vinod Nair, Head of Research at Geojit Financial Services, amid conflicting attitudes across the world, the local market entered dangerous territory in the second half. The primary industrial sector appears to be growing slowly, according to recent IIP data. The slump is also being exacerbated by FIIs' persistent selling and high valuations.

Although it hasn't had much of an influence on the recent negative events, the market is now focusing on underlying profits growth, which is still very poor this quarter and might result in a downgrade if resilience isn't seen in next quarters. All industries were in red, with the exception of banking, metals, telecom, and fertilizers. HDFC Bank saw a decrease as a result of lower-than-expected passive fund inflows following the most recent revision to the MSCI index.

In highly volatile trading on Monday, the domestic benchmark indices, the Sensex and Nifty 50, closed flat amid gains in private banks helping the benchmark Sensex recover some of the early losses caused by accusations made by US short-seller Hindenburg Research against SEBI chief Madhabi Puri Buch and her husband. Broader markets outperformed as they somehow managed to end in green. India VIX rose by 3.47% at 15.87.

Sensex finished at 79,648.92, down 56.99 points, or 0.07%. At 24,347, the Nifty 50 fell 20.50 points, or 0.08%.

Market Review and Outlook - Ruchit Jain

Nifty 50 witnessed some selling pressure at the start of the day on Monday, but managed to recover from the lows along with a positive market breadth. The 50 percent retracement level of the most recent downturn, 24,480–24,500, is critical resistance that the index was unable to overcome. Since the daily RSI readings have not yet turned positive, the follow-up move will be crucial to watch, and this upmove from the bottom still appears to be a retreat move only. While 24,200 is the immediate support and the 24,000–23,900 zone comes in then a move over 24,500 will result in a continuation of the upmove towards 24,630. Traders are advised to continue to trade with a stock specific approach for time being and wait for confirmation of a resumption of the uptrend before forming aggressive positions for a directional move.

Stocks in focus today - Ruchit Jain

On stocks in focus this week, Ruchit Jain recommends Oil and Natural Gas Corporation Ltd (ONGC), and Hindustan Unilever Ltd (HUL).

ONGC

The stock has been forming a ‘Higher Top Higher Bottom’ structure and is thus in an uptrend. In the recent corrective phase, prices have managed to take a support around the 40 DEMA, and have resumed the uptrend from there. The price volumes action is bullish and hence we expect a continuation of the uptrend.

Hence, positional traders can look for buying opportunities in the stock in the range of ₹338-333 for potential target around ₹364. The stop loss on long positions should be placed below ₹322.

HUL

In the last couple of months, the stock has been moving in an uptrend where the price upmoves have been supported by good volumes, while buying interest have been seen in the corrective phases. In last couple of weeks, the prices have consolidated within a range which just seems to be a time wise correction within an uptrend. Considering the broader trend, we expect the stock to resume its upmove soon.

Hence, traders can buy the stock on declines in the range of ₹2,720-2,700 for potential target of ₹2,900. The stop loss on long positions should be placed below ₹2,600.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.