Shares to buy or sell: Ruchit Jain of 5paisa recommends Amara Raja Energy, Aurobindo Pharma Futures today

Stock Market News: On Tuesday, the Nifty 50 and Sensex, the key domestic indices, started the day without significant changes as the market underwent a phase of consolidation following a shift in focus by foreign investors towards other Asian markets such as China and Hong Kong.

The Nifty 50 index saw a slight decrease of 22.40 points or 0.09%, opening at 25,788 points, while the Sensex opened at 84,257, showing a decline of 42 points or 0.05%.

Experts in the market have observed that the redirection of funds from Indian markets to other Asian markets has resulted in a period of consolidation in the Indian stock market.

The unprecedented volatility in stock markets is evident in yesterday's 4.8% collapse in the Nikkei index and the 8% jump in the Shanghai Composite Index, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. It is expected that this high volatility will shortly stabilize.

Massive capital inflows into Chinese equities have been sparked by the anticipated revival in the Chinese economy. In the previous five days, this has produced 20% gains in the Shanghai Composite, and in the last month, it has produced 19.45% returns in the Hang Seng. FIIs are drawn to this momentum, but it's unclear how long this tactical trade will endure.

Market Review and Outlook - Ruchit Jain, Lead Research Analyst at 5paisa

Nifty 50 started the week on a negative note as the correction in some of the Asian bourses had a rub off effect on our markets. The index traded with a negative bias throughout the day and ended just above 25,800 with a loss of about 370 points.

The large cap stocks witnessed profit booking which led to a sharp correction in the benchmark indices at the start of the week. The FII’s had ‘long heavy’ positions in the index futures segment with over 80 percent positions on the long side and the RSI readings on the charts were in overbought zone post the recent run up. Such a combination usually leads to a contra trend move and thus, we witnessed the same on Monday. The immediate support for Nifty 50 is placed in the range of 25,750-25,700 which will be important to watch, if this gets breached then we could see the retracement towards 25,520 and 25,340. In case of a pullback move, resistance will be seen around 26,000-26,100.

Shares to buy or sell today - Ruchit Jain

On shares to buy or sell on Tuesday, Ruchit Jain recommends Amara Raja Energy & Mobility Ltd, and Aurobindo Pharma Futures.

Amara Raja Energy & Mobility (Buy)

The stock has recently gone through a corrective phase and prices are now hovering around the 100 EMA support. The stock has formed a bullish engulfing pattern on the daily chart during end of last week. The RSI on the daily chart has given a positive crossover and hence, we expect a pullback move in the near term.

Hence, short term traders can look to buy the stock in the range of ₹1,425-1,415 for potential near term target around ₹1,530-1,550. The stop loss on long positions should be placed below ₹1,350.

Aurobindo Pharma Futures (Sell)

The stock has formed a lower top lower bottom on the daily chart and is thus in a short term corrective phase. The RSI oscillator is negative while short build was seen in the futures segment.

The stock has closed below the 1,500 mark where high open interest was placed which could lead to unwinding of positions of put writers.

Hence, short term traders can look to short the October Futures in the range of ₹1,480-1,490 for potential target around ₹1,390. The stoploss on short positions should be placed above ₹1,550.

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.