3 top stock picks from Rajesh Palvia for next week

“On the upside, 23,750 is the key area. Unless and until the Nifty crosses that level, there will be no confidence in any kind of minor pullback. So, 23,750 needs to be crossed on weekly close basis, only then we do Let’s see some interest again on the buy side,” says Rajesh Palvia, Axis Securities.

Now, what do we make of this? We found no support at 23,500.
Rajesh Palvia: So, this is the third time in the last two months that we have slipped below the 200-day moving average. So, it clearly shows that market confidence is very low and FII supply pressure is very high at this time. Hence, this type of supply pressure continues in this market. We will not be able to sustain above the 200-day moving average. This is the fifth consecutive day where we are trading below the 200-day moving average for both the indices, Nifty and Bank Nifty. And Bank Nifty has shown a very deep cut of 4.5% during this week. So, the kind of supply pressure in the banking and financial sector clearly shows that the market is still not trying to find any kind of bottom at this time. We are trading close to the critical support area of ​​around 23,300, which is the previous swing low, and if we look at the entire rally after the general election in June 2024, we are almost at that level now.

So, the rally started at 23,300 and we reached 26,000. Now, again, we are back to the same level. If it breaks below 23,300, it will be very negative for the market at this time and then we can probably continue this down move and slip below 23,000 level. So, those who are still holding long and cannot exit the market should follow 23,300 as stop loss, who are traders in nature. If it breaks, a possible cut could extend to 23,000 and 22,800 on the downside.

On the high side, 23,750 is a prime area. Unless and until the Nifty crosses that level, there will be no confidence in any kind of minor pullback. Therefore, 23,750 needs to be crossed on a weekly closing basis, only then can we see renewed interest on the buying side. But again, this is a very eventful month, so uncertainty remains. So the market is likely to behave bearishly in the next week as well.

This whole week we have seen a mixed bag of updates coming from PSU banks. Some have been good, some have been rather decent or mixed and that sector is your biggest losing sector. It is currently at a nine-month low. Going forward, do you see some scope for a reversal in the chart for PSU banks or do you think it is the private banks that are heading this way because even the Nifty private banks have not done all that well, but at least some of the PSU banks better than So, what is the outlook and if you have to play the entire banking and financial space, would it be PSUs, private banks or NBFCs your top choice?
Rajesh Palvia: So, if I have to choose a bank, then yes, my choice will be only on a private bank. Even in the recovery PSU banks could not recover as much as private banks did in the previous boom.

If there is any pullback in the banking space, private banks will outperform as most of the PSU banks have broken their important support area on their long-term charts.

Recovery in PSU banks will be slower than in private banks. So, among private banks, ICICI Bank and HDFC Bank can be seen in this correction. And both these banks may recover once the market stabilizes at a certain level.

Only in PSU bank, we are more focused on SBI, it is the only stock where we like based on technical parameters on long term chart, so that stock can be seen from PSU basket, but our focus is more on that. Private sector banks at this time.

But yes, in NBFCs, some pockets are looking very attractive and we have seen some recovery in some NBFC space. Thus, stocks like Bajaj Finance, Bajaj Finserv, Chola Finance, all these stocks have shown some recovery in the last two weeks, but again looking at the market conditions, all these stocks are also witnessing supply pressure but maybe we can see. Some recovery in NBFC pockets, Bajaj Finserv, Bajaj Finance, Chola Finance, all these stocks are on our buy list. So, once the market starts to recover, we will focus on buying these stocks.

Because we understand that you talked about that we are still in wait and see mode, there is no clear direction as to where the market will take the tide. Now, in this situation do you want to stay with the outperforming sector? What would be your top recommendations for our viewers?
Rajesh Palvia: One should only stay on the top performing sectors and the only sector where we are focusing at this time, ie IT, is the sector where we can see the bullishness to continue. And some sectors like pharma, chemical space are also showing some buying interest, and FMCG, all these three-four sectors are looking attractive at this stage, despite the kind of sell-off we are seeing in the market.

Therefore, the top selection will be from these fields only. So, a long call on the FMCG space, that is Marico. The stock is showing a breakout on the near-term chart and given the structure for Marico, we believe the uptrend will continue here, 695 where we are projecting a target, with a stop loss of around 650 to buy Marico.

Another stock which is Uno Minda Auto subsidiary stock, the stock has managed to breakout on the weekly chart of its descending trend line and as the buying action has been seen in the stock throughout the week, we believe that the uptrend will continue here, towards a possible target of 1150 we next. We can see with a stop loss of 1070 for the week.

A brief thought on the cement sector. We have seen that most of the cement stocks have seen supply pressure throughout the week. As UltraTech looks bearish, the stock has managed to breakout its all-important moving averages. Hence, one can go short for a downside target of 10,600 with a stop loss of 11,200 in Ultratech Cement futures.