3 top stock recommendations from Rajesh Palviya for next week

Nifty hitting record highs for three straight sessions, Nifty Bank above 50,000, midcap, smallcap have also been hitting record highs, you have sectors also hitting record highs. Nonetheless, Nifty has been trading slightly range bound. So, what do you have to make of this anomaly that we are seeing in the market and what is the view going ahead into next week?

The Nifty restricted its gain less than 1% week on week, but the way the market behaved during the week, there was very strong buying action across the board in so many sectors. So, that clearly gives us confidence that there is a lot of confidence on the street and retailers and participants are aggressively buying in the market.

The sectors where we were seeing underperformance in the last couple of years are sectors like paper, fertiliser, even sugar and other sectors, now they have started participating in this rally. So, looking at the broader market, we are holding our bullish view, the kind of buying action across the sector which we are witnessing, that clearly shows that this rally can extend further and possible target for Nifty we can see towards 23,700 to 23,800 in the continuation of this up move. So, buy on dip should be your strategy based on the derivative data, the major put writers are placed at 23,300, 23,100 strikes.

So, these areas are likely to act as a major support area for any kind of minor dip if it happens in the market. So, your stop loss should be placed at 23,200 to hold a long position on the higher side. 23,700 could be the possible target in the near-term basis. On the Bank Nifty, still Bank Nifty is struggling to give a decisive breakout above 50,000 mark, so that is the challenging level at this moment based on the call concentration. So, I think if Bank Nifty starts a new week above 50,000, 50,100 mark, then there would be short covering action and then possible rally can extend to 50,500 to 50,600 for Bank Nifty also. Though most of the banking stocks have shown some buying interest in this week, I think next week we could see a rally in the banking stocks and Bank Nifty can also start contributing to this upward momentum. At this moment, yes, we are holding a bullish view for Bank Nifty. Your stop loss should be placed at 49,600 to hold long positions.FIIs have significantly come down on the short positions, from 3.4 lakh contracts, now their short position is merely 34,000. What does this indicate? Are we in for higher levels? FIIs can turn into bigger buyers because at least their selling has stopped. The quantum of buying is not that significant, but at least the selling has stopped.

If we look at the last five-six-month data, FIIs were absent in the market and this rally is led by the domestic participant. So, I think they have cut down their short position. So, again, this is again showing that there is a pain in their short position, that is why they are cutting down their short position and I think if FIIs are not doing short positions at this moment, then the retailers are participating in this market and they are quite bullish on the market.

So I think domestic flows are driving this market at this moment and the way we are seeing incremental growth in SIP flows and other avenues, so I think that is likely to continue further and we believe that this trajectory can continue further more higher though FIIs are not buying in the market at this moment also, so I think domestic flows can drive the rally as most of the domestic themes are playing out in this market. So that clearly shows that everybody is optimistic towards the growth trajectory of the Indian economy and that is why this is the sign of the continuity of this bull market.

What would be your recommendations for the coming week?

First stock is from the pharma space, Cipla is on our radar. Stock is now at an all-time high trajectory. The way the stock managed to break out of last three-week consolidation, that clearly shows that there is a continuity of uptrend.

We believe that Cipla can continue furthermore upside towards 1620. One can buy this stock with a stop loss of 1530. The second stock is JSW Energy. Stock managed to break out of its multiple supply zone on the daily chart.

Stock is almost enjoying its all-time high trajectory. So, JSW is looking bullish. Technical structure on weekly as well as on the daily is showing that this momentum can extend further. Upside target we are projecting towards 710. Keep your stop loss at around 668.

And the third stock, which is Triveni Engineering. Most of the sugar stocks have done well and Triveni Engineering, again, looks very promising. The way the stock managed to break out of almost seven-eight-week consolidation, that clearly shows that here we can see a follow-up buying action in the coming week. Possible target we can see towards 425. Triveni Engineering is buy with stop loss of 388.