Buy, Sell or Hold—What should investors do with Vardhman Textiles, TTML and Tata Chemicals?

Amid fears of inflation and FPIs relentless selling, the Indian market closed the week with a sharp cut on Friday. The broader Nifty50 declined more than 1.6% and the Sensex dropped over 1.5% as the former slipped below 16,500 and the latter lost nearly 800 points. The markets across the world were also reacting to rate hikes by major central banks, including the Reserve Bank of India (RBI) to tame inflation.

Foreign Institutional Investors remained net sellers to the tune of Rs Rs 6723.59 cr in May so far, adding to pressure on the Indian market. "FPIs continued selling in the early days of May also with a net sell figure of Rs 6723.59 cr through 6th May. Since markets have turned very weak globally FPIs may continue to sell perhaps with reduced volume," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

He was of the view that despite the recent correction in the market, valuations are not cheap. "Perhaps, if Nifty corrects another 5% from the current levels, FPIs are likely to turn buyers. With aggressive Fed tightening, lockdowns in China and the Ukraine war lingering the situation is not favorable for a sharp turnaround in markets," the expert added.  

Meanwhile, the Nifty midcap and small cap indices closed lower by 1.8% and 2.5 % respectively as India Volatility Index (VIX) closed above 21-mark on Friday.  

All Nifty sectoral indices slipped in the red with IT, Realty dragging the market the most on Friday's closing. Though FMCG and oil & gas too ended up in red, but some buying interest was seen in stocks from these sectors. 

Certain stocks were also in focus on Friday. These were Vardhman Textiles, TTML and Tata Chemicals. Vardhman Textiles gained over 8%, TTML dropped 5% and Tata Chemicals ended over 1% lower.  

Here is what Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd, suggest investors should do with these stocks 

Vardhman Textiles 

The stock rallied nearly 10 percent on May 6th, 2022. Today stock opened with a gap down and bounced back sharply.  Regardless of weak market conditions Vardhman Textiles Ltd held its strong momentum throughout the day. After a long correction, it has formed a promising long bullish candle which supports further uptrend from the current levels.  The texture of the pattern suggests pullback formation will continue in the near term if stock succeeds to trade above 365.  For the trend following traders 365 would be the key level to watch out, trading above the same we could expect uptrend continuation wave up to 415. Further upside may also continue which could lift the stock up to 430. However, below 365 uptrends would be vulnerable. 

TTML  

In this quarter so far, the stock has corrected over 16 percent.  Post correction, the stock is hovering near 50-day SMA. Currently, the stock is witnessing non directional activity perhaps, traders are waiting for either side breakout. For the bulls, 145 or 50-day SMA would be the important breakout level to watch. And if the stock manages to close above the same, we could expect a quick uptrend rally towards 155-162. On the flip side, trading below 125 may increase further weakness up to 200-day SMA or 115-110 level. 

TATA CHEMICALs 

In this week, the stock rallied nearly 10 percent. Post short-term correction, the stock took the support near 50-day SMA and bounce reversed sharply. post promising reversal, it not only cleared the short-term resistance of 1020 but succeeded in closing above the same which is broadly positive. Technically, on weekly charts it has formed a long bullish candle which supports further uptrend. For the trend following traders, 995 or 20-day SMA would be the key support level. And, if stock manages to trade above the same, we could expect continuation of uptrend wave up to 1065-1100.