Buy these 4 stocks for gains while Sensex, Nifty may extend losses; market texture

Can expect one more pullback rally up to 17175-17225/57600-57800.
(Image: REUTERS)

By Shrikant Chouhan

The Nifty ends 71 points lower while the Sensex down by 195 points, Metals, Energy and Auto stocks witnessed sharp profit booking at higher levels.  On Tuesday, after a positive opening the index quickly surpassed the yesterday high and rallied over 200/900 points but once again bears took the charge at higher levels and due to profit booking at higher levels the index corrected sharply. The nifty corrected over 375/1300 points from the day highest level. After a volatile trading session finally it closed below 17000/57150 mark which is broadly negative for the market. 

Technically, the index has formed strong reversal formation with bearish candle which indicates further weakness from current levels. The index also maintained lower top formation that also support short term weakness.  For the day traders, now 17000/57150 and 17050/57300 would be the key resistance level, above the same we can expect one more pullback rally up to 17175-17225/57600-57800 on the flip side, as long as the index is trading below 17000/57150 the index could continue its weak formation till 16900-16800/56800-56500.  The texture of the market is extremely volatile hence level based trading with strict stop losses would be the ideal approach for the traders.

BATA INDIA: BUY
CMP: Rs 1,911 | TARGET Rs 2000
SL: Rs 1870

On a broader time frame, the stock had been in a strong uptrend move, however, the recent price correction from its supply zone has plunged the counter to its important support area, as a result we expect the pullback rally in the coming sessions.

TECH MAHINDRA: BUY
CMP Rs 1550.95 | TARGET: Rs 1630
SL: Rs 1520

The stock witnessed a gradual decline from its all-time high of 1625, however, the downside seems to be restricted and recent sloping channel breakout formation along with incremental volume activity suggests an uptrend to resume from the current levels.

M&M: BUY
CMP: Rs 835 | TARGET Rs 880
SL: Rs 815

After hitting the highs of 979 the counter has seen a vertical slide on the downside and is into oversold territory, moreover, it has formed a double bottom chart formation near the retracement zone with the rising volume activity which indicates a trend reversal in the coming trading sessions.

CIPLA: BUY
CMP: Rs 973.2 | TARGET Rs 1020
SL: Rs 950

After a long consolidation, the counter has given a strong breakout and is trading in a range post breakout, the intraday charts suggest a further up move from the current levels for uptrend continuation. The recent breakout move could be the start of a fresh leg of uptrend in the counter.

(Shrikant Chouhan is the Head of Equity Research (Retail) at Kotak Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)