Markets
Ahead of RBI policy, three stock recommendations by Raja Venkatraman for today–7 February
Summary
- Here are three stocks to buy as recommended by Raja Venkatraman of NeoTrader for Friday, 7 February.
Stock market today
On 6 February, a mild negative bias continued to suppress bearish tones in the market, especially ahead of the Reserve Bank of India (RBI) policy announcement on Friday. The absence of strong market triggers is currently favouring a neutral to the bearish outlook. Traders should consider using any temporary dips during market recoveries as opportunities to buy the index. While global cues remain mildly bullish, raising hopes for positive follow-through, benchmark indices initially opened higher. However, they lost all gains within the first hour and fluctuated between gains and losses for the rest of the session, ultimately closing the day in negative territory.
Outlook for trading
The recent drop in the trends is showing a firmer resolve to hold above the supports, which we have previously discussed, around 23500. If these levels are breached, it could lead to increased bearish sentiment. Like we mentioned earlier expectation of a rate cut is now taking centre stage as the rupee weakens, and the global market sentiment remains mixed. There are still several days to go before the Nifty hits its time targets, and therefore, the current support zone remains tentative.
We have been mentioning that a “sell on rally approach" needs to be considered since we are looking at the need to factor that in an event-driven week, the possibility of a trend to sustain becomes difficult. Now, the key levels of 23500 have been held alongside Bank Nifty, which continues to hold above 50000. The promising results from SBI could bolster the banking pack in the coming session. The daily chart shown below the highlights that the rise seen lately could face resistance at the cloud region around 24000 that could act like a resistance if we witness a rally. The main point here is that the earlier instances have all witnessed a sell off hence it would be prudent to tread ahead with care.
Currently the trends have remained positive and the Option Data suggests that PCR remains steady, highlighting that the trends remain pressured. As we head into the last trading day of the week Bank Nifty shall be of high prominence as there is lot of expectation from RBI initiatives and this could set off some encouraging triggers to the upside.
Also Read: How equity investors can ride the post-Budget wave
Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman:
• Hindustan Oil Exploration: Buy at current market price and dips to ₹206, stop ₹203, target ₹235
This oil refinery stock has been undergoing a lot of pain, and the last few days have witnessed some strong buying momentum, which was subject to some intense sell-off. The last few weeks have been spent in consolidation, and now, with volatility expanding to the upside, one should look at some potential rise ahead. Also, with the RBI policy coming up and the recent profit booking dragging the prices into ‘kumo’ support region, a rebound can be expected. As the Relative Strength Index (RSI) is now above 60, that clearly highlights that the bullish move seen on Thursday can continue.
• Camlin Fine Sciences: Buy above ₹139, stop ₹132, target ₹152
This counter, after dipping into the ‘Kumo’ support region of around ₹120-125 levels in the last week, has some steady resolve on the way up. A long body candle close on the last two trading sessions highlights continued positive sentiment. With momentum showing the potential for further rise in store, one could consider going long.
• South Indian Bank: Buy above ₹27, stop ₹25.25, target ₹30
Banking stocks are in demand ahead of the policy and the rise seen in the last session that highlights the possibility of more rise. The gradual resumption of upward momentum highlights more room at the top. The attempt to move beyond the consolidation zone clearly highlights a strong case of bullishness. Relative strength index (RSI) is seen rising and pushing the prices above recent consolidation. With a long body candle firmly in place, we can look to initiate longs.
Raja Venkatraman is co-founder, NeoTrader.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Also Read: Budget has delivered the tax break, but will the markets bite?
