Technical view by Nooresh

Pullback in Indices…..Quality mid caps now look attractive

Sensex Technical View :
Sensex looks set for a short covering pullback as many of the constituent stocks also look oversold and an upmove from here should face resistance at 16000 levels and traders should reduce trading positions around those levels . A good directional move can only be seen after April 1st week when the markets should stabilize.Till then trade pullback rallies only for a small upside .

Mid caps and Small caps :

I have been consistently saying not to average or put in fresh money or the investible cash as in weak sentiments stocks may go much beyond fair value and stay there for some time. While the index may have not corrected in last 1 week but quite a lot of mid caps have gone down by another 10-20% and as was discussed in last week those who do buy will have to digest 15-20% downside which seems over in quite a lot of stocks and dips from here should be used to buy only with a long term view and for a limited upside.

Stocks which ran in the rally and have corrected to 2006 levels look good for bottom fishing .

Simple strategy buy 50% of exposure u would like to take for risky people 70% and wait with part cash to buy 10-15% below from cmp if it does come down . Will need to hold for a period of 3 months or in some case returns may be quick also. Look for limited upside of 20-30% to book profits.

Many of these stocks were covered in our calls way back and moves 100-300% after that now below those levels tooo ... But we always tend to enter early and exit much before the tops for safety .

Investment rationale for the below picks :
Fundamentally if there were some good reasons for all these stocks to go 100-300% then the fundamentals have not changed in the last 2 months but prices have so should rationalize to fair values soon.
Technically the stocks look oversold but that doesnot imply to buy. Technically i have always been the momentum picker where in we enjoyed the ride in the below stocks. For example Ispat from 25-30 to 80 continously recommended. Spicejet from 65 to 90 -100 . Not a technical call currently but a good bottom fishing strategy for limited upside.

IFCI ....

stock ran from 15-20 to 115 in last 1 year. Sterlite deal was to be sealed at 107 rs. Now available at 39 .Buy at cmp and add till 35 .
Upside potential 50-55 .

Spice Jet

Stock ran from 60 to 100 in no time . FIIs , MFs and HNIs trapped at 80-100 levels also. Now at 38-39. Buy at cmp and add till 35 . upside Potential 48-55 .

Ispat Inds ()25-28 buy) , JP hydro ( 40-46 ) , Adlabs ( 450-510 ) are at good bottom fishing levels . Current market price is below the price they started from.

BOI and Allahabad Bank look good in the banking space for long term investment and can buy it regular intervals from here on.

Many of the stocks look good in similar manner and will soon cover more . Investors can do their own research to select as per their conviction . if people have more such stocks can put it in the chatbox as it wil make it easier to short list as right now have only discussed the highly liquid ones .

Best Regards,



Article by Nooresh Merani

Nooresh has written 2531 articles.

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