The RBI’s rate cut has generated strong buying interest at lower price levels, suggesting that the market trend is now turning positive. Although resistance remains at higher prices, the recent market decline has paused for now.
Three stocks to trade on today, recommended by NeoTrader’s Raja Venkatraman
IIFL(current price: ₹581)
Buy above ₹581, stop ₹569 target ₹610 (Multiday)
- Why it’s recommended: IIFL is a leading Indian financial services conglomerate providing diversified financial services players with a nationwide presence. After some profit booking seen from the start of this month the revival above the clouds on intraday is indicating some positive sentiment. With the positive DMI firming up once again we can look at the possibility of more upside in the coming days. A dip into the TS&KS region and a rebound augurs well for a revival. Consider going long.
- Key metrics:
- P/E: 62.09
- 52-week high: ₹592.55
- Volume: 831.17K
- Technical analysis: Support at ₹550, resistance at ₹650
- Risk factors: Heightened regulatory scrutiny and asset quality pressures to volatility in capital markets
- Buy : above ₹581
- Stop loss: ₹569
- Target price: ₹610 in 2 months
CUMMINS (current price: ₹4,600.20)
Buy above ₹4600, stop ₹4555 target ₹4670 (Intraday)
- Why it’s recommended: Cummins India Ltd. (CIL) is a major part of the global Cummins Inc. (USA), leading the design, manufacturing, distribution, and servicing of diesel & natural gas engines and power generation systems. After some consolidation the prices have reached a strong set of valuation support and are seen rebounding. Also, the ADX and DMI are seen rising on intraday charts auguring well for the suggesting a strong possibility to move higher.
- Key metrics:
- P/E: 56.35,
- 52-week high: ₹4,588.46
- Volume: 465.15K
- Technical analysis: Support at ₹4,490, resistance at ₹4,700
- Risk factors: Macroeconomic cyclicality and international trade policies to evolving environmental regulations and technological transitions.
- Buy : above ₹,4600
- Stop loss: ₹4,555
- Target price: ₹,4670
SBILIFE (current price: ₹2,025.90)
Buy above ₹2030, stop ₹2005 target ₹2070 (Intraday)
- Why it’s recommended: SBILIFE. After a consolidation the stock is seen slipping lower and a formation of a long body candle that is heading below is indicating bearishness. With the trends in RSI seen below the neutral zone the stock could be under pressure. Look to go long.
- Key metrics:
- P/E: 82.87
- 52-week high: ₹2,085
- Volume: 557.47K
- Technical analysis: Support at ₹1,950, resistance at ₹2,100
- Risk factors: Health and medical history, regulatory changes, competition and Pricing Pressure
- Buy : above ₹2,030
- Stop loss: ₹2,005
- Target price: ₹2,070
How the stock market performed last week
Between 8 and 12 December, the NSE experienced a volatile yet resilient performance, with contrasting movements across sessions. The week opened on a weak note as all major indices slipped into the red, dragged down by defence and PSU bank stocks, while metals stood out as the lone positive sector. InterGlobe Aviation, Asian Paints, BEL and Hindustan Unilever were among the top Nifty laggards, shedding between 3% and 10%, whereas Hindalco, Grasim, Tata Steel and Eternal managed notable gains.
Mid caps reflected similar divergence, with Bharat Dynamics, Coforge, Mazagon Dock and M&M Financial Services under pressure, while Hindustan Zinc, Vodafone Idea, Bandhan Bank and SRF advanced. Toward the latter part of the week, sentiment improved as the Nifty extended gains for two consecutive sessions, closing above 26,200.
Market breadth favoured advances, midcaps outperformed, and except FMCG, all sectoral indices ended higher, led by strength in metals and realty, underscoring renewed investor confidence.
Outlook for trading
Sentiment is governed by where the main indices are. So it was not unusual to see the sentiment somewhat curbed by the lack of movement in the main indices. They were also hemmed in by not so positive feeds coming in from overseas markets. The Fed yielded to the rate cut to bolster the US markets in the last week. With indices marching upwards the possibility of a recovery was triggered.
First was the strong economy numbers from the US and the second was the unexpectedly higher GDP numbers locally. Both these events led to a surge of buying in the market and for a change, the moves in the indices seemed actually owing to fresh buying rather than just short covering.
With FII short positions on the rise and Mid and Small cap still struggling the probability of Nifty having a smooth ride is limited. The December series began the month with a low post and is now aiming to end it with a high post! The 1000-point gain of November has certainly created fresh expectations for the December series.
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Now, the question is: where do we go from here? Chart 1 shows a possible projection using Fib ratios. This is pointing towards 26,200/26,300 as the next extended targets.
The past three Mondays have been brutal for the market. As volatility steps up, we can seeD in the chart above that the trends will remain sketchy. Hence it’s best to hold on to bullish sentiment and be selective.
Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.
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.
