Profit Booking Looms: Top 3 Stock Picks for Healthy Returns, Says Jigar Patel

As the Nifty 50 index continues its upward momentum, investors are advised to book their profits and be cautious of potential market fluctuations. The index has been on a bullish streak, gaining 1.3% last week and breaking above the significant 24,300 mark. The index’s foreign institutional investors’ long-short ratio has surged to 84%, indicating a heavy leaning towards bullish positions, which may lead to significant profit booking in the near term.

Key Market Insights

The Nifty 50 index has been on a tear, with a breakout from a rising channel that has been in place for several months. The index has reached a high of 24,401, and if it surpasses 24,400, the rally could extend to higher levels. However, it’s essential to book full profits even in that scenario to mitigate risks associated with the current market extremities.

The Nifty Bank index has experienced a relatively narrow trading range, with a weekly low of 51,996 and a high of 53,357. The index closed in the green, recording a modest gain of 0.61%. The index encountered resistance in the 53,000-53,400 zone and subsequently experienced a minor pullback to the 52,600 level, resulting in a Doji candlestick pattern, which is often indicative of market indecision.

Top 3 Stock Picks for Short-Term Gains

Based on our analysis, we recommend the following three buy calls for short-term gains:

1. HDFC Life Insurance Company

HDFC Life recently gave a clean breakout on the weekly chart, signaling a potential bullish trend. The stock has been consolidating for two weeks around the 200 Exponential Moving Average (EMA) on the weekly scale, building a solid foundation for the subsequent breakout. The stock has closed above the last three weeks’ high of Rs 603 and is currently positioned near Rs 607. We recommend going long on HDFC Life within the price range of Rs 595-610.

Strategy: Buy Target: Rs 660 Stop-Loss: Rs 575

2. Cipla

Cipla recently displayed a clean breakout on the daily chart, signaling a potential bullish trend. The stock has been consolidating for seven days on the 50-day DEMA on the daily scale, building a solid foundation for the subsequent breakout. The stock has closed above the last seven days’ high of Rs 1,500 and is currently positioned near Rs 1,510. We recommend going long on Cipla within the price range of Rs 1,500-1,510.

Strategy: Buy Target: Rs 1,600 Stop-Loss: Rs 1,460

3. SJVN

SJVN recently experienced a breakout on the daily chart, indicating a potential bullish trend. The stock has been consolidating for 18 days on the 50-day DEMA on the daily scale, creating a solid foundation for the subsequent breakout. The stock closed above the 18-day high of Rs 139 and is currently positioned near Rs 142. We recommend taking a long position on SJVN within the price range of Rs 140-142.

Strategy: Buy Target: Rs 155 Stop-Loss: Rs 134

Disclaimer

The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Historical Context:

The Indian stock market has been experiencing a bullish trend in recent times, with the Nifty 50 index breaking above the significant 24,300 mark and gaining 1.3% last week. This upward momentum has led to a surge in foreign institutional investors’ long-short ratio, indicating a heavy leaning towards bullish positions. The Nifty Bank index has also been trading within a relatively narrow range, with a weekly low of 51,996 and a high of 53,357.

The article highlights the importance of booking profits in the current market scenario, as the index’s upward momentum may lead to significant profit booking in the near term. The author, Jigar Patel, recommends three buy calls for short-term gains, citing technical analysis and chart patterns.

Summary in Bullet Points:

• The Nifty 50 index has been on a bullish streak, gaining 1.3% last week and breaking above the significant 24,300 mark.
• The index’s foreign institutional investors’ long-short ratio has surged to 84%, indicating a heavy leaning towards bullish positions.
• The Nifty Bank index has experienced a relatively narrow trading range, with a weekly low of 51,996 and a high of 53,357.
• The author recommends booking full profits to mitigate risks associated with the current market extremities.
• The top three stock picks for short-term gains are:
  • HDFC Life Insurance Company (Buy, Target: Rs 660, Stop-Loss: Rs 575)
  • Cipla (Buy, Target: Rs 1,600, Stop-Loss: Rs 1,460)
  • SJVN (Buy, Target: Rs 155, Stop-Loss: Rs 134)
• The author advises investors to check with certified experts before taking any investment decisions.