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Kunal Bothra’s top stock picks for the week ahead

The independent market analyst says the market would require some fresh bullish triggers to thrust itself upward from current level. And with the earnings season out of the way, one has to look at individual stocks and sectors to provide that sort of a trigger.

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Last Updated: Feb 21, 2020, 01.43 PM IST
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Kunal Bothra-1200
What the market has done is composed itself rather well in the second half of the week, because there was bearish pressure for three to four sessions on a trot.
What do you make of last week’s market move? It was a week which can probably be divided into two halves?

Well, it could certainly be divided in two halves. What the market has done is composed itself rather well in the second half of the week, because there was bearish pressure for three to four sessions on a trot. Once Nifty broke the 12,000 level, it created some nervous jitters in the market that a bigger reaction may now unfold.

But the bulls were up to the challenge and managed to contain the decline, made this fall see a higher bottom than the one we had recorded back on February 1 after the Union Budget. The two situations were completely different, because on the Budget Day, we had the overhang of positions, which people jettisoned when the Budget disappointed them and we were also responding to global events; the US was down and this coronavirus thing was also at its peak with China expected to go down. All of that created a major bottom there. But we had none of those when we went down a couple of days back.

So it was a quite natural for the market to actually make a higher bottom this time, because it was easier to find support at these levels. What is required now for the market to thrust itself upward are some fresh bullish triggers. With the earnings season out of the way, we will have to look to individual stocks and individual sectors to provide that sort of a trigger. It is possible that the market may consolidate at a higher bottom and then seek to go up when some fresh triggers emerge later on during this week or the rest of the month.

What are some of your top ideas?

I like the chart setups in MindTree. IT is one of the areas, which have been witnessing some strong price action. MindTree, even though a midcap, has been leading that particular sector in terms of price action. NIIT Tech is the other stock that comes to mind. The consistency with which MindTree has been going up in last 10 to 12 weeks has helped it get past the four-figure level, trading into Rs 1,000-1,040 levels at the close of the week. That shows the consistency of buying that has come into MindTree. As of now, the momentum signals are intact on the charts and, therefore, one can expect MindTree to probably continue to flow ahead.

So I would recommend a short-term play on MindTree using a stop loss at about Rs 1,020 to look for a target somewhere in the vicinity of Rs 1,075 to Rs 1,100 in the coming week. So that is a stock to buy.

The second one when I have a buy call would be Aarti Industries. This is one of those specialty chemicals stocks, which had the favourite aspect of tailwind from China and that does not seem to be ceasing because this latest coronavirus problem also is creating some sort of positive flows. The way they are positioned right now, it seems like their market share is actually going to increase. And like the chairman recently said even if the cost of their raw materials goes up, that will really not be any issue for them because they will be able to pass it on comfortably to the end users. So that is a nice place to be in the manufacturing company space. The chart is looking very-very attractive. It has been very good for a long time, but fresh breakout signals are now available and I do believe the stock can head up to around Rs 1,100 level quite easily. So, that is a short-term ‘buy’ with a stop loss at about Rs 1,020.
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