Jan 9, 2024
Nifty downtrend likely to continue, go slow on fresh longs; Buy these two stocks for potential gains
By Subash Gangadharan
Nifty 50 has been trending lower for the last few weeks and making lower tops and lower bottoms in the process. And Nifty has been moving lower after the recent breakdown from 16,824-17,415 trading range. While we remain open to pullback rallies in the very near term, we expect the downtrend to continue. Our short term bearish view would turn bullish only if the Nifty manages to take out the highs of 17,133. Therefore recommend a go-slow approach on fresh longs till we see signs of sustainable strength.
Buy Gujarat Gas
Gujarat Gas has shown relative strength this week. While the Nifty index has lost 1.27% this week, Gujarat Gas has gained 4.55% over the same time period. In the process, the stock has also broken out of its recent trading range on the back of above average volumes.
Zooming into the daily chart, we can observe that the stock trades above the 20 day SMA. Daily momentum indicators like the 14-day RSI too are in rising mode and not overbought, which augurs well for the short term uptrend to continue.
We therefore believe the stock has the potential to move higher and take out its previous intermediate highs in the coming weeks. We recommend a buy between the 537-541 levels. CMP is 539.35. Stop loss is at 502 while target is at 600.
Buy Axis Bank
After correcting from a high of 816 touched in April 2022, Axis Bank found support at the 648 levels in May 2022. These are strong support levels as they correspond to previous intermediate lows touched in December 2021.
On Wednesday, the stock broke out of its recent trading range. Momentum readings like the 14-day RSI too have bounced back from oversold levels and are in rising mode now.
With the intermediate technical set up too looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 670-680 levels. CMP is 675.85. Stop loss is at 655 while target is at 710.
(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
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