2 top technical stock recommendations from Swati Ananda Hotkar

"Nifty was facing a very strong resistance at around 18600 to 18800 levels on the higher side but definitely as of now it has a good support at around 18270 level. If it surpasses that support level on today’s closing basis then again we are likely to see the extension of this fall towards 18100 to 18000 levels which is a support provided by 50 DMA," says Swati Ananda Hotkar, Nirmal Bang Securities.

What is your outlook as 18300 now seems to be getting threatened as far as Nifty goes?
Definitely this week we have seen a very spectacular rally in the Bank Nifty but not in the Nifty. Now from the last two days the bears have taken the front seat. As per the extension theory, 44200 was actually acting as very strong resistance level on the Bank Nifty and exactly from that level onwards we have witnessed some sort of profit booking. This profit booking is likely to be extended which might take the Bank Nifty towards its 50-day moving average.

As of now currently the support is placed at around 43000 levels so if the Bank Nifty manages to break that level on the closing basis then this kind of a profit booking is likely to be extended for the next week.

I believe that 42500-42000 levels can be tested in the coming few trading sessions which is a support provided by its 50 DMA. We will witness some sort of a pullback rally from there onwards.

Nifty has not given that kind of a rally which we have seen in the Bank Nifty. Nifty was facing a very strong resistance at around 18600 to 18800 levels on the higher side but definitely as of now it has a good support at around 18270 level. If it surpasses that support level on today’s closing basis then again we are likely to see the extension of this fall towards 18100 to 18000 levels which is a support provided by 50 DMA.

So I believe both the indices will take a support of 50 days moving average and again we will see some sort of a profit booking. So at the current levels we are advising all the clients to book partial profits and traders can hold on with strict stop losses as the view is a little bit cautious at the current level.

What will be your top ideas then?
As of now we are recommending one short call that is Hero MotoCorp. We are witnessing a selling pressure from the last few trading sessions in this particular counter and as of now technical data has given the breakdown of 20 days moving average.

So I believe we are likely to witness more selling pressure into this stock. And I am looking at a target of Rs 2670-2640 levels on the downside. So one can take a short call at the current market price with a stop loss of Rs 2765.

And in contra to this I am giving a buy call on Gujarat Gas. If we look towards the weekly chart, the stock has given the breakout of a pendant pattern today. It is not really doing very well because of the market pressure but definitely it has a very strong setup for the long term horizon. So one should take a long call at the current market price looking towards the risk reward ratio. One can take a long position at the current market price and the stop loss can be kept at Rs 515 for an immediate target of Rs 545.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)