Use dips to buy Nifty; Biocon, EIL & Poly Medicure could give 17-19% in December series: Likhita Chepa

It looks like markets might continue their corrective phase for the next few trading sessions. Buying on dip would be a favourable strategy for the long term investors if Nifty comes to the level of 16,000 which is its strong support level, Likhita Chepa, Senior Research Analyst, CapitalVia Global Research Limited – said in an interview with Zeebiz’s Kshitij Anand.

Q) Markets closed the week with a freaky Friday. What led to the price action in the week gone by?

A) Indian benchmark indices ended the week on a weaker note with both Sensex and Nifty losing more than 4 per cent each on a weekly basis.

Indian markets fell in line with their global peers. The sell-off was witnessed in covid-sensitive sectors, and the focus seems to be now shifted towards the pharma sector amid growing concerns over the new variant with higher mutations.

The tapering of bond purchases by the US Fed and the rising inflation are the other factors that led investors to book profits.

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Q) What does the data for November expiry tell you about December series? Where do you Nifty and NiftyBank headed in the new series?

A) Looking at the OI 17,700 is likely to act as a key resistance level for the Nifty50 in the December series. On the other hand, 17,000 would act as a key psychological support level below which Nifty can test the level of 16,750.

The Bank Nifty is likely to face resistance around 37,500 and support is placed at 34,000.

Q) Sectorally, auto, PSU banks stocks took the beating. They were one of the top sectoral losers in the week gone by. What led to the price action?

A) The Nifty Auto and Nifty PSU bank lost more than 8 and 6 per cent respectively. The auto stocks were already under pressure due to the global chip shortage.

It looks like investors are booking profits in these sectors and shifting their portfolios to the defensive sectors on the back of growing concerns over the news of the COVID situation worsening globally along with the inflation fear.

Q) Unlock themes such hotels, leisure, travel, cinema shares felt the heat. Do you think these sectors will remain under pressure in the coming week?

A) These sectors were severely hit due to the pandemic and have witnessed some green shots only in the last few months.

With some of the European Nations imposing lockdown and chances of restrictions on travel globally, it is likely that these sectors might take one more hit in the coming months.

Q) What should investors follow – buy on dip or sell on rally strategy?

A) It looks like markets might continue their corrective phase for the next few trading sessions. Buying on dip would be a favourable strategy for the long-term investors if Nifty comes to the level of 16,000 which is its strong support level.

Q) Your top 3-5 trading ideas for the December series?

A) Here is a list of top trading ideas for the December series:

Biocon: Buy above Rs 380| LTP: Rs 362| Target: Rs 430| Stop Loss: Rs 340| Upside 19%

The stock has formed a Spinning Top candle on its weekly charts. It looks it has a resistance of important moving averages around the level of 380.

Going forward any breakout above this level is expected to bring positive momentum in the stock. We recommend initiating a buy above 380 with a stop loss of 340 and a target of 430.  

Engineers India Ltd: Buy above 75.10| LTP: Rs 73.90| Target: Rs 88| Stop Loss: Rs 65| Upside 17%

The stock has formed a reversal pattern on its weekly charts and is taking support of its important moving averages. The momentum oscillators are also indicating bullish strength in this stock.  

Going forward, any breakout above the level of 75 is expected to bring positive momentum in the stock. We recommend initiating a buy above 75.10 with a stop loss of 65 and a target can be placed at 88.  

Poly Medicure: Buy above Rs 1025| LTP: Rs 979| Target Rs 1200| Stop Loss: Rs 869| Upside 17%

The stock has given a trend line breakout on its weekly charts and is taking support of its important moving averages. The stock is witnessing resistance around the level of 1025.  

Going forward, any breakout above the level of 1025 is expected to bring positive momentum in the stock. We recommend initiating a buy above 1025 with a stop loss of 869 and a target of 1200.  

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)