2 top stock recommendations from Shivangi Sarda

“22,250 would be an important make or break zone here. So, with a support of 22,250 and an upside 22,800 marks, Nifty could be a good buy on the decline strategy right now,” says Shivangi Sarda, Motilal Oswal Financial Services.

Give us your sense on where you believe the market is headed. We have seen a positive day yesterday after 10 consecutive days of cuts coming in. Today seems to be like we are going to sustain in the green. What is the outlook going ahead? Do you believe that we have bottomed out and do you believe it is all good going for the market ahead?
Shivangi Sarda: So, we have seen that the markets have witnessed the comeback of the bulls and of course, we are all cheering to the greens, but we are facing some sort of resistance at 22,500 marks, which needs a lot of unwinding still yet to happen for the next fresh leg rally to commence from here. Now, from the last three sessions, buying has been quite impressive and the put call ratio has also improved with a cool off in the India vix, which suggests that bulls are quite comfortable and buying at the support levels have been quite strong.

Now, next, once the index crosses 22,500, next up we could see 22,800 on the cards with a support of 22,350 marks. So, support is quite close, but overall we are witnessing good amount of buying.

22,250 would be an important make or break zone here. So, with a support of 22,250 and an upside 22,800 marks, Nifty could be a good buy on the decline strategy right now. Talking about Nifty Bank, we have seen that some of the heavyweights are not performing and they are jittering this index down, but overall buying can be seen in the smaller banks, which have been emerging from the last three to four trading sessions.

Now, PSU banks have started coming into action, which will be interesting to watch out for, but overall we are witnessing some sort of a consolidative move over here in the banking index as compared to the broader market because of the lack of follow-up that we are witnessing in the heavyweights.

So, next up, levels that we are looking at is 49,250 for Bank Nifty and 48,000 as a support, which will be quite major. So, this is it for the indices. Both the indices, we have a buy on decline strategy, but with more conviction on the Nifty side.

But the clear theme emerging today is the crude oil beneficiaries. It started a couple of days back with the OMCs. Now, the paints and the tyre stock, speciality chemicals are joining the party. Give us a sense that amongst these, which is the segment that you believe can participate or do well more even from these levels?
Shivangi Sarda: So, absolutely, there has been quite a lot of positive movement in our stocks and the related stocks as well. On my radar is actually MGL, which is a little offbeat, but taking cues from this space is this counter, which has been witnessing excellent short-covering move in the yesterday’s session and today also we have seen a good follow-up from here.

The stock has been consolidating from the last 14 weeks and getting ready to come out of its consolidative band. And the consolidation has happened at a lower base which clearly indicates that the risk-reward is quite favourable at these levels.

We have seen a pullback from 1,200 odd levels, which is quite favourable and positive. So, recommending a buy here in MGL with a target of 1,370 and a support of 1,300 levels.

But I also see that Tata Steel is on your radar. Tell us, what is the rationale behind this and why are you recommending this stock as well?
Shivangi Sarda: So, metal pack, especially the steel names have been on radar and Tata Steel specifically we have seen that from the last seven weeks, it has been forming a higher bottom, which clearly indicates that base is shifting higher.

Supports are now being bought into. From the last two sessions, we have seen volume along with the price surge, which confirms the buying interest.

It is trading comfortably above its key exponential moving averages, which was acting as a resistance from the month of November. But now, we have seen that it has surpassed that and clearly, buying has been very strong here. So, this one is on my radar for a target price of 155 levels and a support of 145.

Talk to us about Reliance because, yes, of course, there have been brokerage notes, but the stock after that recent up move is now holding on to the gains of 1.5%. Do you believe that more upside is likely in this one?
Shivangi Sarda: So, talking about Reliance, of course, it is quite a reflection of the market and we have seen that from the last two trading sessions, there has been good amount of buying. But after the gap up opening today, we have seen some lacklustre move.

But the good part is that it is inching towards 1,200 and getting ready to comfortably hold above the same. Now, we are still yet to cross the 3rd March high which will then again start the fresh leg of rally.

So, once it crosses and holds above 1,200, then we could see levels of round about 1,235 odd levels and 1,180 would be an important support to watch out which is near about today’s low as well, but this will act as a good support because we have seen good pullback move from these levels itself. So, this will be my take on Reliance.