India’s stock markets could not sustain the constant supply from higher levels and finally caved in to the uncertainty as the selling bias dominated proceedings on 20 May. With the selling bias showing its colour once again the bulls have been pushed to the background and will need more encouraging triggers to step up the momentum to the upside.
Here are two stocks to buy or sell as recommended by NeoTrader’s Raja Venkatraman for Wednesday, 21 May.
Best stocks to buy today
CHENNPETRO: Buy CMP and dips to: ₹650 | Stop: ₹635 | Target: ₹725-740
JUBLPHARMA: Buy above: ₹991 and dips to ₹950 | Stop: ₹935 | Target: ₹1,090-1,150
The stock market on 20 May
As anticipated, the market was waiting for some random triggers to begin a trend. The benchmark equity indices extended losses for a third straight session on Tuesday, 20 May, with the Sensex and Nifty 50 falling by over 1%, dragged down by profit-booking in heavyweight stocks, rising global bond yields, and concerns over a resurgence in covid cases.
The Sensex dropped 1.06% to close at 81,186.44 points on Tuesday. The Nifty 50 declined by 1.05% to end the day at 24,683.90. Only three of the 30 Sensex stocks ended in the green while the rest declined, with auto, financial, and defence stocks bearing the brunt of the selling.
Outlook for trading
We have been speaking about consolidation in the markets and the ability of the market to sustain at higher levels. However, a lack of clarity combined with some profit-booking has dragged the market lower. Both the benchmark indices were clear about the drop in bullish enthusiasm and the drag clearly shows that the upward trajectory is still a laboured one.
The charts indicate that the momentum has temporarily sealed the higher levels at around 25,100 and will need more encouraging triggers to carry the prices higher. The strong selling pressure emerging at these levels will keep the markets subdued as we near the last few days to May expiry. Bank Nifty will be keenly watched as the trends in the index have turned lower, which will prompt some bearish bias to emerge, impacting the market sentiment in the days ahead.
The options data indicate a potential selling bias to sustain, which could induce a more volatile market scenario. The PCR for Nifty is at 0.49 and for Bank Nifty at 0.75, which still shows some signs of hesitation from the option segment as of now. Hence, investors should consider any rally as a selling opportunity in the indices.
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Two stocks to trade on 21 May: Recommended by NeoTrader’s Raja Venkatraman
Chennai Petroleum Corp. Ltd (CHENNPETRO)
Current market price: ₹675
Buy CMP and dips to: ₹650 |Stop: ₹635 |Target: ₹725-740
- Why it’s recommended: Chennai Petroleum,after posting strong quarterly results, showed a strong recovery in its stock the past few days. In the process, its share price has formed a nice rounding pattern at higher levels, signaling a potential upward bias. With encouraging tailwinds investors can consider going long on this stock. A strong breakout seen on Tuesday signals potential for more upside.
- Key metrics
- P/E: 45
- 52-week high: ₹1,275
- Volume: 6.19 million
- Technical analysis: Support at ₹450; resistance at ₹800.
- Risk factors: Volatility in crude oil prices, project implementation risks, and potential environmental impacts
- Buy: CMP and dips to ₹650
- Target price: ₹725-740 in 1 month
- Stop loss: ₹635
Current market price: ₹989.30
Buy above: ₹991 and dips to ₹950 |Stop: ₹935 |Target: ₹1,090-1,150
- Why it’s recommended: The Jubilant Pharmova stock has been under pressure in recent months and its prices have formed a rounding bottom, leading to a strong breakout above the value area resistance of about ₹970. Robust volumes seen recently signal some positive vibes emerging in this counter in the coming days.
- Key metrics
- P/E: 292
- 52-week high: ₹1,310
- Volume: 762,000
- Technical analysis: Support at ₹777; resistance at ₹932
- Risk factors: Compliance with health regulations, fluctuation in healthcare policies, manufacturing inefficiencies
- Buy: Above ₹991 and dips to ₹950
- Target price: ₹1,090-1,150 in 1 month
- Stop loss: ₹935
Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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