Nifty forms bearish candle on daily scale, may slide to 18000 below 18350; buy these two stocks for gains

Nifty forms bearish candle on daily scale, may slide to 18000 below 18350; buy these two stocks for gains

By Rahul Shah

Equity benchmark indices posted their second loss tracking the global peers after investors fretted over hawkish comments from major central banks. Sentiment has been dampened across the globe as the market fell between 4-6% following a 50 bps rate hike and hawkish message from the US Fed on 14th, followed by a similar stance by ECB and BOE. As a result, Sensex nosedived by 1400 points  (2.5%) in the last two sessions which resulted pulled Sensex down by 844 points or 1.4% to close at 61338. Nifty shed 228 points to close at 18269. Moreover, poor global economy data like 11-month low US Retail sales data, lower than expected China Home sales data, and Germany PMI data have had a negative impact on the market.  

Most of the sectors declined 1-2% during the week on account of profit booking. Nifty IT Index slipped 2% dragged by a selloff in information technology stocks, which have a larger revenue dependency on North America and Europe, and a potential recession can hurt their prospects. Interest-sensitive sectors like auto, NBFC, and real estate index slipped by 1-2%. However, sugar stocks witnessed fresh buying after the news that the government will consider allowing additional sugar exports from next month (January 2023). Fertilizer stocks gained on hope of favorable budget announcement in fertilizer sectors and surged in fertilizers prices owing to the Russia-Ukraine war.

Market Outlook

Expect, domestic market to be negatively impacted after grappling with hawkish signals from the Federal Reserve that sparked concerns about higher interest rates for longer leading to a possible recession. But cooling down domestic inflation data may add some relief to Indian bourses. Any sharp decline will be good buying opportunity. We expect sectors like FMCG, cement, infra, banks, sugar, hotel, and capital goods stocks to be in limelight next week. However, IT and metal stocks are expected to see more pain due to slowdown in global growth.

Technically, Nifty has formed a Bearish candle on daily scale with long upper shadow indicating pressure at higher zones. It formed a Bearish candle on weekly frame and negated its higher lows of the last two weeks. Now, till it holds below 18350, weakness could be seen towards 18081 and 18000 zones whereas hurdles are placed at 18350 and 18442 zones.

Stocks to BuyHDFC BankCMP: Rs 1639 | SL: Rs 1600 | Target: Rs 1700

HDFC Bank is forming pole and flag pattern on the daily chart and holding well above 20 DEMA. It has formed an Inside Bar candle on the weekly chart and small follow up can take it toward higher levels. RSI on the daily and weekly scale is in the bullish zone which will support the up move and it has given highest daily close of the last seventeen days. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 1700 with a stop loss of Rs 1600.

IGL :CMP: Rs 430 | SL: Rs 421 | Target: Rs 455

IGL has formed a pole and flag pattern on the daily scale and it has surpassed the falling trend line which indicates positive price setup. There is momentum across the gas stocks which will support the up move. RSI on the daily and weekly scale is in the bullish zone which will take the prices higher. Considering the current chart structure, we advise traders to buy the stock for an up move towards Rs 455 with a stop loss of Rs 421.

(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. The views expressed are the author’s own. Please consult your financial advisor before investing.)