Two largecap stocks Nooresh Merani is betting on for next week

We have seen the energy index give a breakout today, so the new rotation could be more on the energy names like Reliance as well as power, says Nooresh Merani, independent technical analyst.

Edited excerpts:

We entered the Nov series and ended the month of October series with quite a bit of gusto, 900 points higher and with a gain of almost 5 percentage points. But do you think this will continue in the month of November or not?

We expect the trend to remain positive for the index as well as for the broader markets. It is just that the momentum is not great. We are not seeing a sharp move across any of the names as such. We are seeing a slow and steady move and there is a lot of rotation. Now one stock in the Nifty has finally taken leadership, which is Reliance Industries. The largest weight in the Nifty has finally given a short-term breakout. The rest of the names like HDFC, HDFC Bank and ICICI, Kotak, etc, even the IT pack is still trendless and we are not seeing any momentum over there but at least we have started seeing at least one heavyweight take some leadership. So once we see more leadership, we could go towards that 18,000 mark on the Nifty and for now 17,600 remains a support. So for now expect this range to continue and the broader market should also do well once we are done with the rate hike announcements, which are there next week across the world.

What do you think will be the trend going forward, is there any name from the FMCG pack whether ITC, which is now at 350 level, or any other name from the FMCG and IT pack that you like?

So apart from ITC nothing comes up on the technical radar in terms of momentum, rather most of the names are showing sideways or downward trends. For example, a new 52-week high and an all-time high on Nestle India and the next day the stock flops out, so in that scenario you do not want to be participating in a sector which is anyways low beta and in that it is not showing any further price momentum or rather taking a slowdown drift. It is very clear that ITC is the only one which is showing relative strength out here so ITC looks like the promising one in FMCG.

Similarly in the IT pack the view is like I have been saying for some time. No more negative on the sector but it is a sector where you want to buy the dips rather than buying after a 10-15% bounce. We have seen a good 10-15% bounce in most of the stocks, would wait for a dip and retest, say another 3-5% down in some of the names to buy.

The only stock which comes closer to an entry point is TCS, which has not seen a very sharp rally, but closer to 3000 to 2900 is a support. So out here one could be looking at it as an accumulate, but not as a trade in a big way in IT.

For now it is focussing beyond the FMCG and IT names, going towards the rest of the pack. We have seen the energy index give a breakout today, so the new rotation could be more on the energy names like Reliance as well as power.

Where do you see Maruti headed now? Given the fact that it surpassed the 9400 mark, do you think that 10,000 is just around the corner for Maruti Suzuki?

Expecting 10,000 but there is a lot of resistance which I expect at 10,000 because that was the top back in 2018, two times it topped out around that area as well as a major psychological mark. So I expect this to go and test 9800, 10,000. But I would not be a buyer at current levels because the risk reward is not great after today’s move and would expect some bit of a correction from 10,000 levels.

Overall a dip closer to 9250 is where I would be looking out, but the trend has clearly turned towards positive and the momentum also is very strong today.

What are your top bets for the coming week?
So looking at two largecap names, first is a buy on Mahindra & Mahindra, given a breakout above that 1280, 1300 mark, continues to be the leader in the auto pack, a stop loss at 1280 and a target price of 1450. Second is a buy on Reliance Industries which has given a flag breakout above that 2500 mark. Expecting it to test the recent highs of 2640 odd, a stop loss at 2500 here.