2 top stock recommendations from Vinay Rajani

“We need to see how we close today as there has been a recovery, but the primary trend has been negative for the benchmark indices as the Nifty is trading below its 20, 50, 100 and 200 day moving averages, So it’s negative. Sign,” says Vinay Rajani of HDFC Securities.

Help us in your decision on the index levels as for today we see that there is indeed weakness on the benchmark indices, but some recovery from the lowest point of the day. So, in the second half, do you think we’re going to get those gains from the lower levels? And where do you see Nifty going as well as Bank Nifty?
Vinay Rajani: So, basically, for the time being, the Nifty has broken the December 20 low which was the previous swing low of 23,537. But it did not last and in fact, we have seen a recovery of over 150 points from the day’s low.

So, it is a good sign. Some sectors are still performing like healthcare and pharma continues to do well. But the Nifty benchmark indices seem precariously poised right now.

However, as mentioned earlier, the Bank Nifty has taken support at its 200-day moving average. And earlier, in the month of November also, Bank Nifty found support there and formed a major bottom.

But this time, we need to see how we close today as there has been a recovery, but the primary trend has been negative for the benchmark indices as Nifty traded below its 20, 50, 100 and 200 day moving averages. has been, so there is a negative sign.

Here’s how we close in the Nifty today. And 23,500 is strong support. Undoubtedly, it should be sustained on a closed basis, that is what we feel.

Positional trend and overall trend has been bearish, but we need to see if this is holding at 23,500 closing level or not as FII long to short ratio index has reached oversold territory in future. So, it gives me a sense that there could be a pullback rally as well. So, it is a conditional view. If 23,500 is broken on the closing basis, further bearishness will follow, otherwise we can expect a pullback to 23,700, 23,800 levels.

What about stock specific recommendations?
Vinay Rajani: So, as I said, the overall trend on the pharma and healthcare sectors has been positive and they are showing resilient moves. So, still I think this can continue.

So, Sun Pharma is a largecap pharma stock which is looking strong on the charts and has a good technical setup. So, Sun Pharma can be bought around 1900, I suggest a stop loss for trading at 1870, and I expect a target of 1950 in the next two-three sessions.

Second choice I will go short. This is a conditional selling recommendation. So, if ICICI Bank breaks today’s low, in that case, we can expect it to go lower.

Therefore, ICICI Bank January futures can be shorted below 1290, which is a conditional sell in January futures. Therefore, 1290 is the trigger level below which a short can go with a stop loss of 1310, and on the downside we expect a target of 1260.

So, this is a conditional sell in ICICI Bank January futures and may go long in Sun Pharma on the long side.

When it comes to some of these railway counters, what do you see moving in today’s trading session? Do you believe that today’s move is somewhat temporary in nature and for those who were really stuck at high levels this could be a good opportunity to step up and get out of that path because yes, a positive event has indeed happened. There is a flow of news on RVNL but stocks like IRCON and Rites are also performing better. So, help us understand the big trends you look out for when it comes to railway counters.
Vinay Rajani: So, basically if I go to all the railway counters, they are trading below the key moving averages, so the positional trend is down. And if I look at yesterday’s close, till yesterday all the railway counters were looking weak on the chart and the close was not very convincing and today the news has increased.

So, there is no proper technical setup that gives me confidence that this is a buy signal. So, it is a news based pullback rally we can call.

This could be a dead cat bounce even in an overall downtrend. So, yes, we can’t say that it is a reversal case, so this can be temporary and everything depends on the market as well.

If Nifty continues to do what it is doing now and the trend remains negative, railway stocks will again find supply at higher levels and come down. So, it is not that reliable. Let’s wait for some confirmation. Follow-up buying in the coming sessions will confirm the trend. But for now, these railway stocks seem to have a dead cat boom.

But should we also tread with caution in stocks like Godfrey Phillips and Torrent Power?
Vinay Rajani: So, Godfrey Phillips, yes. Godfrey Phillips has found support at its 200-day moving average. So, this is one of the good stocks which has corrected in a healthy way and 8430 was all time high and from that level it has moved to 5100 odd level.

So, there is a support around this level and it is in a protective space, so we can expect some pullback from this particular counter. So, yes, there is strong support around today’s lows and we can expect a bounce in this stock, so if one has a long position, definitely it can be held and I expect a pullback to 5850 which is next. Resistance

It is one of those stocks that has very little correlation with market momentum and may actually outperform in the coming session as there is strong support. I expect Godfrey Phillips to bounce back and continue to grow whatever has been started today.

Torrent Power has also bounced from oversold levels. So, if one wants to take a long position purely for trading, today’s low should be kept as a strict stop loss. So, 1410 is a very tight stop loss. If it is pulled out, again, we can expect a downtrend.

But yes, a pullback rally could be there, I can see that because of the oversold status and the pullback could be as high as 1560, 1570. There is more Rs. 70 to Rs. 80 may be the spike we see in torrent power. Today’s low has not been broken again, so it is 1410.