IT could be among the first to recover; Top 3 Trading Ideas of the Month: Anand James – Economic Times | Jewelry Dukan

“If recession fears subside, the IT sector could be one of the first to rebound given the blows it took in the initial sell-off,” he says Anand Jameschief market strategist .

In an interview with ETMarkets, James said, “Based on a domestic theme, we favor banks with expectations of loan book expansion.” Edited excerpts:

A volatile week for Indian markets but bears took control and pushed benchmark indices below key support levels. What led to the price action?
Indian markets weathered the storm on Wednesday and stood out remarkably after a gapped open, leading to the view that we are completely decoupled.

This argument is a bit far-fetched, coming to light in the days that followed as Indian stocks also tumbled after continued pressure on US stocks.

More importantly, this was the fourth attempt this year as the Nifty50 pushed past 18,000 in search of a new record high but was met with only reject trades.

This time, the US and India planned twin rate decisions presented too much event risk to ignore in the hunt for a newer top, which justified profit booking.

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What strategy should investors adopt ahead of the Federal Reserve meeting? Time to hedge?
There is clearly risk-off trading at play and this has been exacerbated by higher US inflation as well as other macros including recent jobless claims which point to a healthier economy capable of withstanding a restrictive regime. Incidentally, the probability of a 50 basis point rate hike is completely off the table and the probability of a 100 basis point rate hike has gone from zero to 24% a week ago.

If recession fears subside, the IT sector could be among the first to rebound given the blows it took in the initial sell-off.

On the domestic theme, we favor banks with expectations of an expansion in the loan portfolio.

Sector-wise, power and metals saw buying. What led to the price action?
Energy stocks continued their uptrend this week on the back of recent government bonds. Decision to extend the deadline by 2 years for the implementation of the standards for flue gas desulfurization (FGD) systems in various power plant categories.

Steel stocks also appear to have been boosted by the potential lifting of recently imposed export tariffs.

What’s Driving the Rally That’s Up About 50% Through Thursday? What should investors do – buy now or book profits?
Tata Investment had a staggering surge last week. It’s a difficult plot to follow. The standard approach would be to take some money off the table.

But despite the reversal pattern, although markets slumped on Friday, and more importantly, given that re-entry into such stocks later might be difficult, it would be better to let gains run with the downside risk level at 2691 on closing basis or at 2419 if wallet and patience allow.

Your 3-4 trading ideas for the next 3-4 weeks?
Here is a list of the best trading ideas:

: Buy| LTP Rs 1078| Target Rs 1240| Stop loss Rs 1010| Up 15%
After a year-long decline, the stock had found a bottom around the 940-950 zone in June, from where a reversal is underway.

On the weekly chart, the stock has broken out above the

SAR level of 1036 supported by a large volume observed for the first time since March 22nd.

On the monthly charts, it bounced off the 61.8% Fibonacci level of 920 in July and the moving average convergence divergence (MACD) has shown bearish exhaustion, suggesting more buying to take place in the near future.

Hence, we recommend traders to buy the stock now for a target of Rs 1240 and a stop loss can be placed below Rs 1010.

: Buy| LTP Rs 270 | Target Rs 300| Stop loss Rs 254 | Up 11%
After posting profit from its all-time high in December 2021, the stock has retreated to almost 61.8% of the 254 Fibonacci level and has formed an inverted hammer candlestick pattern on the monthly charts, suggesting a possible continuation of the recovery.

The monthly MACD has also seen bearish exhaustion, which reinforces our reversal expectations.

: Buy| LTP Rs 215| Target Rs 250| Stop loss Rs 199| Up 16%
After trading within a 30 point trading range on the monthly time frame, the stock recently broke out. Also, the monthly MACD has broken above the signal line along a parabolic SAR breakout, confirming the bullish momentum.

We will see movement targeting 238 and 250 in the near future.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

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