As long as Nifty 50 above 18,600, positive sentiment to continue; Granules India, GAIL among stocks to buy

On Tuesday, the benchmark indices bounced back sharply, the Nifty ended 118 points higher while the Sensex was up by 418 points. Among sectors, the realty index was the top gainer, rallied over 2.5 percent whereas, despite strong momentum, selective auto stocks witnessed intraday profit booking at higher levels. 

Technically, after a short-term correction, the index has formed a reversal formation and it also formed a bullish candle on daily charts, which is largely positive. For the bulls now, 18,600 would act as a sacrosanct support zone.  As long as the index is trading above the same, the positive sentiment is likely to continue. Above which, the index could rally till 18,800-18,850. However, below 18,600, the uptrend would be vulnerable. Below the same, traders may prefer to exit out from the trading long positions.

Stock recommendations 

Granules India

BUY | CMP: Rs 286 | Target: Rs 300 | SL: Rs 280

Granules India stock was into a sloping channel from the past few weeks. Eventually, its downward move stopped near the important demand zone. Moreover, the strong rebound in the stock and recent trend line breakout confirms that the up move to persist in the coming horizon.

Jubilant Food

BUY | CMP: Rs 485.25 | Target: Rs 510 | SL: Rs 475

After the robust rally from the lower levels, Jubilant Food took a breather for a few sessions with a gradual down move. However, recent reversal formation with decent volume activity indicate the counter is further gaining bullish traction. Hence, we expect the rising trend to persist from the current levels in the short term.

GAIL

BUY | CMP: Rs 107.15 | Target: Rs 113 | SL: Rs 104

Post recent correction from the highs of around 113, GAIL (India) went into a consolidation phase. Eventually, it has formed a rounding bottom chart formation with rising volume and retreated from the lower levels for a fresh leg of uptrend in coming trading sessions.

Asian Paints 

BUY | CMP: Rs 3,261 | Target: Rs 3,430 | SL: Rs 3,190

Asian Paints has given a breakout of its Ascending Triangle chart pattern along with a strong bullish candlestick pattern and rising volume activity on the daily chart. Additionally, major technical trend indicators such as ADX and Stochastic are indicating strength for further momentum to sustain from current levels in the near term.

(Shrikant Chouhan, Head of Equities Research (Retail), Kotak Securities. Views expressed are the author’s own. Please consult your financial advisors before investing.)