Kunal Bothra, independent market analyst, in a conversation with ET Now talks about his stock recommendations for the week ahead and also why a broad-based rally may be the new trend.
Edited excerpts:
ET Now: After rallying for the whole of last week, the market witnessed some correction this week and came down to 10,700-level. What is the outlook from here on?
Kunal Bothra: The last one and a half months have been exceedingly positive for the markets and when you see a sharp retracement, in technical terms, we call it a shakeout and the shakeout generally happens when a new trend is likely to emerge.
Now the only catch to this situation or the direction to the trend has to do more or less with the kind of domestic news that flows in and we have some of that at the beginning of next week.
There is no major damage to the indices in the first two days of the next week. Post that, we should be on the course of rallying once again on the indices because over the last one month the rally on the index has been more broad-based. We have seen all the sector participating, be it Nifty IT, FMCG or the largecap names individually – like L&T, Reliance among others.
The broad participation may become the trend of this rally but the only catch would be the volatility which could come across in the first half of next week.
ET Now: In the run-up to the REC-PFC deal, these two stocks have witnessed significant selling pressure. What would you advise the trade should be?
Kunal Bothra: Both these stocks have behaved differently because if we see REC, then the stock has retraced nearly the entire rally which it had gone through from Rs 100 or Rs 95 levels to almost Rs 120-123 in a span of three or four weeks. However, for PFC, not the entire rally has been retraced. In fact, the stock is still holding above its 200-day moving average.
On an individual basis, in terms of the strength of these stocks, PFC stands out maybe one notch better over REC. And if a trade position has to be taken, then PFC would be a preferred bet.
ET Now: What would you advise in terms of trades for the coming week?
Kunal Bothra: Well the idea would be to try and lower the beta of the trading portfolio and from a couple of stocks that I want to recommend, one is Dabur. It is a relatively stable stock and has seen a good recovery over the last three weeks and then has gone through a mild correction. It was more of a pullback and now it has come back to its 50-DMA as well and is forming some bullish chart patterns on the price basis as well on the daily and the hourly timeframes. I would suggest a buy on the stock with Rs 435 as the target and Rs 398 as stop loss.
My second recommendation would be a buy call on Siemens. The stock is now going through a triangular pattern. It saw good price recovery on Friday and the volumes also improved significantly in the last two days of the previous week. I believe this could be a sign of a decent breakout coming into the stock price, and therefore would suggest a buy with Rs 985 as the target and a stop loss of Rs 920.
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ET Markets
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