Stocks to buy: Sustained foreign capital outflows, rising tensions in West Asia, stretched valuations, lacklustre Q2 earnings, and diminishing hopes for a significant rate cut by the US Federal Reserve weighed heavily on the Indian stock market, pushing the Nifty 50 index down for the third consecutive week ending Friday, October 18.
Experts expect the market to witness some volatility in the short term. However, their faith in the prospects of the Indian stock market for the medium to long term remains intact due to the durability of economic growth, the influx of retail investors, and the start of the rate reduction cycle.
Vinod Nair, the head of research at Geojit Financial Services, believes that investment strategies favouring China over India might be beneficial in the short term. However, the long-term outlook for the Indian market remains strong, with stable growth and increased capital expenditure.
With mixed bias, Nair expects the market to be rangebound in the short term and suggests investors should turn more sector- and stock-specific in such a time.
Experts suggest investors must be prudent in stock selection and bet on only quality stocks. They recommend buying these 12 stocks, expecting them to rise 9-20 per cent in the next three to four weeks. Take a look:
Over the past month, JK Paper has been trading within a consolidation range between ₹445 and ₹475. It has recently broken out of this range, signalling the potential for upward momentum.
This consolidation phase occurred between the 100-day and 200-day exponential moving averages (DEMA), a favourable technical sign suggesting that the stock has built a stable base for further gains.
Moreover, the Relative Strength Index (RSI), which had been moving within a range of 40 to 50, has also broken out and is now retesting the 52-53 levels.
After reaching a peak of ₹5,860 on July 5, 2024, Mazagon Dock has formed a series of lower highs and lower lows.
Currently, the stock has found support at its 100 DEMA and formed a double bottom pattern, a bullish reversal signal.
In the previous trading session, the stock also broke through a descending trendline, as shown in the chart, further enhancing its attractiveness from a technical perspective.
Additionally, the RSI has risen above the 50 level, which previously acted as resistance and now serves as support.
BEML has recently formed a triple bottom pattern near its 200 DEMA, indicating strong support at this level.
This is coupled with a bullish divergence in the daily RSI, a sign that the stock's downward momentum is weakening. This makes the setup more attractive to potential buyers.
In the latest trading session, BEML broke past its previous swing high of ₹3,900 and has managed to sustain above that level easily, further strengthening the bullish outlook.
The stock has been in a strong trend for the last five months. It consolidated recently with support maintained near the ₹580 level, indicating a decent pullback.
The stock has maintained above the significant 50EMA.
The RSI, correcting quite significantly from the highly overbought zone, is currently well-positioned to continue the positive move further ahead, with much upside potential visible from the current rate.
"With the risk-reward ratio looking favourable and technical charts looking attractive, we suggest buying the stock for an upside positional target of ₹700, keeping the stop loss of ₹570 level," said Koothupalakkal.
The stock has indicated a strong breakout above the triangular pattern on the daily chart above ₹2,950, with significant volume participation signifying strength.
It may continue with the positive move further ahead in the coming days.
The RSI has gradually corrected from the overbought zone and is currently well-placed, indicating strength and immense upside potential from the current rate.
The stock has indicated a strong pullback from the 50EMA level of ₹395.
It has given a decisive breakout above the descending channel pattern on the daily chart at ₹417 with a strong bias.
It has taken support near the upper band of the descending channel and 50EMA at ₹411.
A pullback has once again improved the bias, and the RSI after the slide has flattened out with signs of improvement.
"Charts look attractive and indicate immense upside potential; further rise is anticipated in the coming days. We suggest buying the stock for an upside positional target of ₹480, keeping the stop loss at ₹390," said Koothupalakkal.
ICICI Bank is currently taking support from an ascending trendline. Its price consistently forms higher highs and higher lows.
The stock has remained above the 100-day EMA, indicating strong bullish sentiment.
Recently, the price consolidated within a defined range, building a base for potential movement.
A strong closing candle has emerged, signalling a possible breakout and suggesting fresh upside momentum may be on the horizon.
This technical setup points to a bullish outlook. The stock looks poised for further gains, driven by the continuation of its uptrend and support from key moving averages.
The current risk-reward ratio appears favourable, potentially attracting fresh buying interest from this level.
Jindal Steel has demonstrated strong technical support at the 61.8 per cent Fibonacci retracement level near ₹900, which has historically acted as a key support zone on multiple occasions.
This level has once again proven reliable. The stock recently formed a bullish engulfing candle on the daily chart, signalling a potential trend reversal.
The bullish engulfing pattern strongly indicates renewed buying interest and suggests that downside risk may be limited from here.
The stock bouncing off this critical support and showing a positive reversal pattern presents a promising buying opportunity.
Tejas Networks has shown a strong bullish signal on the daily charts, marked by a solid candle supported by a significant volume spike.
The stock has formed a classic double-bottom pattern, indicating a potential trend reversal.
It has also taken support near the ₹1,100 level, which has previously acted as a reliable support zone.
This setup, combined with the increase in volume, suggests strong buying interest at current levels.
The stock bouncing off key support and forming a bullish chart pattern presents an attractive buying opportunity for traders looking to capitalize on potential upward momentum.
Zaggle Prepaid Ocean Services has formed a descending triangle pattern on the daily chart, accompanied by a significant increase in trading volume, signalling a potential breakout.
"If the price closes above ₹450, it could reach short-term targets of ₹510 and ₹530. On the downside, immediate support is at ₹430, offering a buying opportunity on dips. To manage risk effectively, a stop loss at ₹415 is recommended to protect against any unexpected market reversals," said Bhojane.
Bombay Dyeing has shown a breakout from a rounding bottom pattern, accompanied by a significant increase in trading volume, indicating the potential for a bullish move.
"If the price closes above ₹250, it could target short-term levels of ₹284 and ₹300. On the downside, immediate support is at ₹236, offering a potential buying opportunity on dips. To manage risk effectively, a stop loss at ₹230 is recommended to safeguard against unexpected market reversals," said Bhojane.
Max Financial Services is consolidating near a resistance level on the daily chart. This consolidation and a significant increase in trading volume suggest potential bullish momentum.
"A close above ₹1,210 could pave the way for short-term targets of ₹1,330 and ₹1,350. On the downside, immediate support is at ₹1,160, offering a buying opportunity on dips. To manage risk effectively, it's advisable to set a stop loss at ₹1,132 to protect against unexpected market reversals," Bhojane said.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
