Market rumors may continue to trigger panic selling; Religare's top 3 short-term bets

Jayant Manglik of Religare Broking advises using rebound to reduce existing positions and waiting for stability.

Markets remained under pressure for the fourth successive week and lost nearly 2 percent, pressurised by weak domestic cues and lack of support from the global indices.

Participants turned cautious citing continuous fall in select NBFCs and banking majors as steps taken by the RBI and SEBI failed to ease the nerves. It had cascading effect on other sectors, too, and majority witnessed severe decline.

The broader market indices, too, plunged sharply lower which pushed the bulls completely on the back foot. Meanwhile, rollover and unwinding of derivatives positions added to prevailing volatility. In the end, Nifty settled below to the psychological mark of 11,000, after making a low at 10,850.30.

Market rumors are not showing any sign of slowing down and that may continue to trigger panic selling every now and then. We advise using rebound to reduce existing positions and waiting for stability.

Nifty has crucial support at 10,770 and its sustainability is crucial for further recovery. On higher side, 11,100-11,250 would act as hurdles. While mostly sectors will continue to witness volatile swings, pharma and IT look strong on charts.

Here is the list of three stocks which could give better returns in short term:

Aurobindo Pharma: Buy | Target: Rs 830 | Stop loss: Rs 730 | Return: 8.4%

Aurobindo witnessed decent profit taking of late and found support around the short-term moving averages (50/100 EMA) on daily chart. It has formed a fresh buying pivot on the daily chart, after hovering around that support zone for nearly a week.

We advise traders to initiate fresh longs in the range Rs 755-765. It closed at Rs 769.65 on October 1, 2018.

Tech Mahindra: Buy | Target: 810 | Stop loss: Rs 735 | Return: 6.6%

Tech Mahindra has been strongly maintaining its uptrend since 2009 and showing tremendous resilience in the prevailing corrective phase too. It’s currently hovering in a narrow range near its record high, offering fresh buying opportunity.

Traders are advised to use this phase and initiate fresh long position in the given range Rs 755-760. It closed at Rs 759.55 on October 1, 2018.

Ambuja Cements: Sell October Futures | Target: Rs 210 | Stop loss: Rs 235 | Return: 6.6%

Mostly cement counters are struggling at present and Ambuja Cements is no different. It has formed a distorted bearish pattern on the daily chart and likely to see breakdown from the same in near future. The confirmation indicators are also in sync with the view.

We advise traders using any uptick to initiate fresh short positions in the given range Rs 226-228. It closed at Rs 223.25 on October 1, 2018.

Disclaimer: The author is President at Religare Broking. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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