It was another bad week for the equity markets as the benchmark indices shed over a percent and settled almost at the low for the week ended July 19.
The last two sessions of the week not only eliminated all the gains but also pushed the index in red, tracking rising geo-political tension between the US and Iran, continuous FPI outflow and not so encouraging earnings season so far. Among the benchmark indices, Nifty settled at 11,419.2, down 1.15 percent.
We expect volatility to inch higher this week as participants will unwind and rollover their derivatives positions due to schedule F&O expiry on July 25.
Besides, the progress of monsoon, crude oil movement, and global developments will also remain on participants’ radar.
We’ve long list of corporates who will be announcing their results during the week. Hindustan Unilever, L&T, Zee Entertainment, Asian Paints, Ambuja Cements, Tata Motors, Maruti Suzuki India and JSW Steel are some of the prominent names from that list.
Indications are pointing towards further fall in Nifty and the next crucial supports are placed at 11,300 and 11,100.
In case of a rebound, 11,540-11,650 would act as hurdles. We reiterate our sell-on-rise view on Nifty and suggest keeping extra caution in selecting stocks.
Here are three trading ideas that could give 6-8 percent return in the next 3-4 weeks:
Multi Commodity Exchange of India: Buy| Target: Rs 930| Stop loss: Rs 835| Upside: 6.9 percent
MCX has been consolidating within Rs 650-890 for more than a year, after a sharp decline from its record high. It is currently trading around the upper band of that range and is likely to see a breakout from the same in the near future.
The chart pattern combined with the positioning of indicators is adding to the confirmation. We advise traders not to miss this opportunity and accumulate within Rs 865-870.
Shriram Transport Finance Company: Sell Aug Futures| Target: Rs 990| Stop loss: Rs 1090| Downside: 6.2 percent
Most of the NBFC counters are struggling and Shriram Transport is no different. It has been trading with a negative bias for the last one year and is on the verge of a fresh breakdown from the consolidation range. We advise creating fresh shorts in Rs 1,055-1,065 range.
DLF: Sell Aug Futures| Target: Rs 166| Stop loss: Rs 190| Downside: 8.8 percent
Despite the rebound in realty index, DLF has been trading in a consolidation phase and is likely to witness a fresh decline. Indications are in favour of retesting of crucial support zone around Rs 165 in the near future. We advise creating fresh shorts as per the mentioned range of Rs 182-184.
The author is Vice President, Research, Religare Broking Ltd.
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