Stocks to buy this week: Maruti, Union Bank of India, Coal India among eight technical picks; do you own any?
Nifty 50 has been falling amid concerns of prolonged rate hikes by the Fed, sustained FII selling, and high valuations. Experts expect some volatility in the market in the short term. They advise following a stock-specific approach at the current juncture.
Nifty 50 has been in the red for the last five trading sessions, falling almost three per cent. This decline comes amid concerns that rate hikes by the Fed have not concluded, and interest rates are expected to remain elevated for a longer-than-anticipated period. This situation is not only expected to have a significant negative impact on the US economy but also global repercussions.
Foreign institutional investors (FIIs) have been selling in the cash market because of valuation concerns and this trend may be sustained for some time, putting pressure on the Indian equities.
"Sustained FII selling has been a drag on the market in recent days. In the cash market FII selling was ₹18,260 crore, so far this month. Since valuations remain high even after the recent pullback and US bond yields are attractive (the US 10-year bond yield is around 4.46 per cent) FIIs are likely to press sales so long as this trend persists," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"It would be irrational to expect the FIIs to buy aggressively when the US 10-year bond yield is around 4.46 per cent and the dollar index is above 105. Even after the recent correction, Nifty is trading around 20 times FY24 earnings, making India the most expensive market in the world," Vijayakumar said.
Experts expect some volatility in the market in the short term. They advise following a stock-specific approach at the current juncture. Based on the recommendations of experts and brokerage firms, below are eight stocks for the next three to four weeks as they look sound on technical parameters. Take a look:
Axis Securities
Union Bank of India | Buy range: ₹102-98 | Target price: ₹110-115 | Stop loss: ₹95
The weekly chart of Union Bank of India demonstrates a breakout above the ₹97 level, forming a "cup & handle" pattern, coupled with a bullish candle, affirming a positive bias in the stock's trajectory.
During the formation of the pattern, there was a noticeable decrease in volume activity, followed by a notable surge in volume at the breakout level.
The stock has established a short-term support level at ₹83, which corresponds to a 38 per cent Fibonacci retracement from the price range of ₹60-97. The weekly strength indicator RSI given a crossover above its reference line generated a buy signal.
Coal India | Buy range: ₹277-273 | Target price: ₹299-313 | Stop loss: ₹263
On the weekly chart, Coal India has convincingly broken out of a medium-term "rounded-bottom" pattern at the ₹264 level during
the first week of September 2023, bolstered by a sizable bullish candle, which strongly indicates a significant upward momentum.
The stock is presently maintaining its position above the breakout area and is anticipated to sustain its upward trajectory.
The stock is well-placed above key moving averages of 20, 50, 100, and 200 days, daily SMA (simple moving average), indicating positive momentum in the stock.
The weekly strength indicator RSI is moving upwards and is above its reference line, indicating positive bias.
KSB | Buy range: ₹2,960-2,900 | Target price: ₹3,130-3,285 | Stop loss: ₹2,830
On the weekly chart, KSB has successfully broken out above a "consolidation zone” ranging from ₹2,890 to ₹2,550, accompanied by a sizable bullish candle, which strongly signifies the continuation of the medium-term uptrend.
The breakout has been accompanied by a significant surge in trading volume, indicating an influx of market participation and interest in the stock.
The stock is establishing a pattern of higher high-low on the weekly chart, forming an upward-sloping trendline, which implies a favourable trend. The weekly strength indicator RSI, given a crossover above its reference line generated a buy signal.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers
Aarti Industries | Buy range: ₹500-505 | Target price: ₹580 | Stop loss: ₹460
For the last two months, this counter has been consolidating in the zone of ₹450-475. At the start of September, it gave a clean breakout from the said zone and comfortably sustained above it.
Additionally, there is a massive support near ₹475 in the form of a central pivot range. On the indicator front, the weekly MACD has given a bullish crossover which further hints towards a bullish bias in the counter.
Maruti Suzuki India | Buy range: ₹10,350-10,550 | Target price: ₹12,000 | Stop loss: ₹9,500
After consolidating for over five years, Maruti Suzuki India finally managed to break out from the psychological hurdle of ₹10,000. The breakout was accompanied by humongous volumes and hence looked genuine.
The theoretical long-term target for the breakout seems to be over ₹14,000 from here on. "Traders are advised to buy the stock in the range of ₹10,350-10,550 with a stop loss of ₹9,500 on a closing basis for an upside target of ₹12,000," said Patel.
Sterlite Technologies | Buy range: ₹158-162 | Target price: ₹195 | Stop loss: ₹145
For the last three months, this counter has been consolidating in the range of ₹145-155. Recently it gave a clean breakout from the said range and is currently placed at ₹171 levels.
It has also cleared its downward-sloping trendline quite comfortably. The best part about this reversal is has bounced back from its monthly central pivot range which has acted as massive support.
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher
Petronet LNG | Target price: ₹265 | Stop loss: ₹230
The stock has maintained an uptrend and after the decent spurt it has consolidated, forming a pennant formation with support maintained near ₹230. The RSI also is well placed cooling off from the highly oversold zone. A further rise is anticipated from the current levels with immense upside potential visible.
Union Bank of India | Target price: ₹120 | Stop loss: ₹95
The stock has maintained a good base near the 95 level and it currently has indicated a momentum pick-up with a positive bias. Also, on the weekly chart, it has formed an inverted head and shoulder pattern with the RSI showing a trend reversal.
"The chart has turned attractive, and we suggest buying and accumulating this stock for an upside target of 120, keeping the stop loss of ₹95," said Parekh.
Bandhan Bank | Target price: ₹280 | Stop loss: ₹238
The stock has made a higher bottom formation pattern on the daily chart and has been closing in a positive zone in a falling market to signify strength and high potential to give a further bounce in the coming days.
"The RSI has also shown a reversal to improve the bias, and we anticipate an upward move from here on to scale to the ₹265–280 level. We suggest buying this stock for an upside target of ₹265 level, keeping the stop loss of ₹238," said Parekh.
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 decisions.
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