Monday, February 3, 2025

Buy or sell stocks: Mehta Equities recommends short selling these 3 stocks in a volatile market

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Stock market today: The domestic benchmark indices, Nifty 50 and Sensex, began the day with gains on Tuesday following the Reserve Bank of India’s (RBI) liquidity infusion of 1.5 lakh crores, which lifted investor confidence. The Nifty 50 index started at 22,960.45 points, up by 131.30 points or 0.58%, while the Sensex rose by 292.83 points or 0.39% to launch at 75,659 points.

A significant selloff shook AI and semiconductor shares worldwide on Monday, with AI giant Nvidia plummeting as much as 10%. This decline was sparked by concerns over increasing competition from the Chinese AI startup DeepSeek.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked that the impact of DeepSeek on the US stock market, particularly on tech stocks, has provided a reality check for the overvalued marketplace. In the medium term, this is expected to have a sobering influence on markets worldwide. The Indian market seems to be undervalued and is poised for a recovery.

The RBI’s recent announcement of measures to enhance liquidity in the banking system by approximately 1.5 trillion is a positive sign for the market. This increases the likelihood of a rate reduction by the MPC during the February policy meeting. Banks are anticipated to gain from this development.

Also Read | US Fed policy to Budget 2025: 5 factors that may dictate stock market next month

Market Views – Riyank Arora, Technical Analyst, Mehta Equities Ltd

Nifty 50

Nifty 50 faces major resistance at 23,500 and continues to witness significant sell-offs from those levels. An immediate resistance zone is now placed near the 23,000–23,100 range. Major support is located around the 22,500 level. On the monthly time frame charts, this 22,500 level is expected to act as a crucial support in upcoming trading sessions. Overall, it is a “buy on dips” market, starting from the current market price (CMP) of 22,900 down to 22,500 from a short term perspective, with a sharp rebound anticipated towards 23,500 and 24,000 levels. Traders however should trail their SL to 23,000 mark for all shorts.

Also Read | Nifty Pharma index down over 7% in last 3 days; why are pharma stocks falling?

Bank Nifty

Bank Nifty has formed a potential double-bottom pattern on its technical charts, signaling signs of a reversal from lower levels. The 47,500 mark appears to be a strict stop-loss for all existing long positions, with upside potential towards 49,200 and 49,500 as the rally continues. A strong technical structure and reversal signals from lower levels in banking stocks make Bank Nifty particularly strong at current levels.

Short Sell Recommendations by Riyank Arora

Ipca Laboratories Ltd – Short Sell

Current Market Price (CMP): 1,434

Ipca Lab has broken down below its key support level of 1,470 and is trading significantly below this mark. With weakening volumes and a downward momentum signal, the stock appears poised to hit lower targets of 1,390 and beyond. A strict stop-loss should be maintained at 1,475 to manage risk effectively. Additionally, RSI (14) at 29 underscores the negative trend.

Also Read | Kaynes Technology slumps 19% as management cuts FY25 guidance post Q3 results

Sun Pharmaceutical Industries Ltd – Short Sell

Current Market Price (CMP): 1,713

Sun Pharma experienced a sharp breakdown below the major support level of 1,723, indicating strong bearish momentum. Given the pressure on pharma stocks, the stock is expected to move lower towards 1,675 and beyond. A strict stop-loss at 1,750 is recommended to manage risk. The sharp breakdown below crucial supports, coupled with strong volume activity, points to potential continued weakness.

H.G. Infra Engineering Ltd – Short Sell

Current Market Price (CMP): 1,153

H.G. Infra has sharply broken below its immediate support level of 1,177 and continues to trade significantly lower. With rising volumes and strong selling pressure, coupled with an RSI (14) of around 25 indicating weak market conditions, the stock is likely to target 1,100 and below. A strict stop-loss at 1,225 should be maintained to mitigate risk.

Also Read | How DeepSeek AI sent $593bn shockwave in tech stocks, rattled global markets

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.

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