stocks to buy now: Buy on dips as Nifty & Bank Nifty look bullish; 3 stocks to bet on: Rajesh Palviya

We have seen consecutive record highs on the benchmarks for the broader markets as well over the week. What sense are you making of these moves? Is this a too-much-too-soon kind of rally? Are you penciling in some kind of slowdown next week? What are the levels you are watching out for when it comes to the benchmarks?

Rajesh Palviya: There is no sign of a slowdown at this moment. The way these indices are making a series of all-time highs on a consecutive basis, clearly shows that buying interest is still there. As such, there is no fear on the Street, comfort is still there because this move is done by most of the large-cap stocks. The stocks that were in long consolidation have started participating. The moves in Reliance, HDFC Bank, and other cement stocks show that again the largecap stocks are now taking the charge to take the index further higher.

Though the broader market is also showing good traction, midcap and smallcap also participating in this rally. So that clearly shows that there is a clear confidence on the street and we believe that it was the first day of the July series, so some consolidation or some profit taking, some position adjustment was there. But again, the overall structure is bullish and we believe that this rally can extend further. For the month, almost more than 6.5% gain was registered by both the indices, Nifty and Bank Nifty. Looking at the data set up, still put writers are aggressive at 24,000 strike as well as 23,800 strike, so that clearly shows that these are the important levels on the downside to hold the market again. If we hold the 24,000 level in the coming week, then yes, this rally can extend higher, and the possible target for Nifty we can see towards 24,400 also very soon. For Bank Nifty, 52,000 is the immediate support area based on the put concentration. The two levels – 52,000 as well as 51,800 – attracted more put writing in Friday’s session also. So, these levels may act as a support area in this decline. Again, if Bank Nifty crosses the 52,600 mark, then this rally can extend further towards 53,400 to 53,600 also. So, both indices are looking bullish at this moment; buy-on-dip should be your strategy.

If you talk about the highest open interest, what is being reflected on the first day of the July series is that 25,000 now. The most active call was 25,000, rollover data is above the three-month average, July has got a seasonality also, F&O positioning is aggressively long. What is the broad range one should aim at for the July month for Nifty, Bank Nifty both?
Rajesh Palviya: So, July is going to be a very interesting month. As you pointed out, 25,000 has attracted more call writing because of the way the market has moved up in the last couple of days, that has given that kind of feel that the range has widened at this moment because now we are going to have a budget also in this month. So, nobody wants to take risks to write near-strike calls. So, now instead of writing 24,500, generally we see 500-point from the current market price or beginning of the series, most of the call writers started writing those strikes. But this series is going to be a different series because the market has shown very strong momentum in the last couple of days. The way rollover activity has been done, it is already above the six-month average and almost eight lakh shares have already been added to the open interest for the Nifty. So that clearly shows that this momentum can extend further. So, 25,000 would be yes extreme range on the higher side. And on the downside,23,500 could be the lower band for the July series. So, 23,500 to 25,000 would be the range for the July series.

How would you trade in auto stocks, understanding that the June auto sales are also due this coming week and more or less the data shows that across the segment there can be numbers, and the volumes could be a little subdued. Would you trade in this space or the space has already moved so much, rather find bets in some other sector which are running?

Rajesh Palviya: Aauto indices have still not shown any kind of signal of weakness. Most of the stocks from the auto segment are still holding the ground at a higher level. Though there was some profit booking at a higher level, if we analyse the near-term, and short-term structure, most of the stocks are holding the ground. The new theme that we have seen in the last couple of days, is auto, auto ancillary stocks have done well, as stocks from batteries, stocks from tyres, these all stocks have done well and from there we can see more momentum on the buying side for auto ancillary space.

But yes, if someone wants to buy stocks for a short- to medium-term perspective, yes, auto stocks are still looking attractive. We are holding our bullish view and we believe that this momentum can extend further in the automobile. If you get any opportunity or any decline, you should be ready to buy these dips in the auto stocks.

Let us talk about a sector that has seen a rather contrasting move coming in this week and I am talking about Nifty Realty. We spoke to experts over the week and they had to believe that commercial real estate 2024 could be the best year for that segment. And on the flip side, we have seen Nifty Realty languishing away in trade every day, in fact, for the entire week that went by. What sense are you making of the moves that we have seen in this sector?
Rajesh Palviya: If I analyse the Nifty Realty indices, it is still in consolidation. Since the last three weeks, we have seen that Nifty Realty is in consolidation mode. There was some profit taking at a higher level and looking at the indices view, we may see some more pressure on Nifty Realty and there could be a lower level towards 1090 or 1070 for Nifty Realty. But yes, some of the stocks like as you pointed out, Godrej Realty, Sobha, and Prestige, all stocks are still holding the ground at a high level. Even Lodha is also holding the ground at a higher level.

But most of the stocks are still under pressure. So, there could be some more consolidation for the next couple of weeks. But the overall structure for Nifty Realty is in a bullish trajectory. So, if you get any opportunity around 2% to 3% kind of corrective move in the indices, Nifty Realty stocks, I think one should be ready to buy these dips because again, the long-term trajectory is bullish, we may see again resumption of uptrend in these real estate stocks.

What are your recommendations?
Rajesh Palviya: The first one is from auto ancillary, that is from tyre space., JK Tyre managed to give a breakout of the last five-week consolidation range. Looking at the overall tyre space, we believe that here we can see good momentum in the coming week. We are projecting a target of 450 to 455 for JK Tyre, keep your stop loss around 420.

The second stock is from the oil and gas sector, which is Petronet. The stock is approaching its multiple supply zone. The way short covering was there on series on series, in today’s data there is a long build-up. I think Petronet can continue furthermore upside. Rs 344 would be the next target on the higher side, Rs 323 should be the stop loss.

The third stock is Grasim. There is a very strong momentum in the stock. The stock is moving on a series of higher top, higher bottom formations. The long build-up was there in series on series data. So, we believe that Grasim can extend its gain. Rs 2720 would be the trading target. Keep your stop loss around Rs 2644.