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Two stock ideas from Kunal Bothra for next week

Kunal Bothra: I believe that the index is broadly consolidating. Post three weeks of a strong rally, the index are going through a bit of grind. A lot of signals have been mixed in the last week. On the one hand, you saw a recovery in the US markets, especially Dow, in the second half of the previous week. But our markets went through a phase of correction.

Look at the internals of the markets, Nifty IT index is showing signs of strength, but predominately stronger ones like cement, etc., are the stocks that saw a correction in the second half of the week. So the signals are getting a bit mixed for the index. But when you look at Nifty levels, we have not broken any key supports on the short-term charts. So first and foremost help, I believe Nifty is closer to the 11,700-11,750 zone. We tested that level on Friday but saw a good recovery on an intraday basis.

The candle-stick pattern for Nifty on Friday’s closing basis is also positive. It is a bullish hammer pattern. So a lot of positives are coming across for the index. The good part about the markets in the future is that for every 101-150 points lower on the index, you have strong support. There is gap support and price space support for the index. So, the market should now go into a bit of a short-term grind and short-term consolidation. But if these supports hold on, then there could be a chance that you might see a push back to new highs yet again for the indices.

ET Now: Indiabulls Real Estate saw a nice uptick on Friday. However, it gave up all of those gains and ended the trading session in the red with deep cuts. What do you make of the movements seen over there? Also, IB Housing saw a lot of volatility in Thursday’s trading session as NBFCs cracked, and then on Friday, some more selling action followed the rebound. What do you make of these movements?

Kunal Bothra: IB Housing and IB Real Estate, in terms of short-term, as well as medium-term chart patterns, are in complete contrast because the setup for Indiabulls Real Estate is becoming very positive. The volume texture has changed since the stock bottomed out closer to Rs 75-80, and prices are moving into a stable uptrend. It has even crossed the long-term averages quite easily with a high volume push. Indicators are highly supportive of the stock price. Friday’s selling was maybe the case where you look at the build-up in terms of volumes on the anticipation of the news, and when the information comes out you see some profit booking.

So, the candle-stick pattern on Friday is also slightly negative, but that should probably have an effect just for the subsequent three to five trading sessions. The stock might come back to support at the Rs 115-120 zone. There it should see one more level of buying. Supply comes back to say support zone, which is at Rs 115-120 zone, where it should see one more level of buying.

For Indiabulls Housing, the chart patterns are a bit different because every round of rally you have seen for the stock has been met by a very strong force of selling pressure. The store is now trying to break its vital support. I think Rs 730 is the following support for Indiabulls Housing. If it manages to break and close below this, especially on a weekly closing, it could indicate that the stock would go for an 8 percent to 10 percent correction further below those levels.

Duane Simpson

Internet fan. Zombie aficionado. Infuriatingly humble problem solver. Alcohol enthusiast. Spent several months exporting UFOs in Jacksonville, FL. A real dynamo when it comes to exporting gravy in Tampa, FL. Spent 2001-2004 implementing saliva in Edison, NJ. Had moderate success getting my feet wet with junk food on Wall Street. Practiced in the art of building Virgin Mary figurines in Tampa, FL. Practiced in the art of marketing Roombas in Phoenix, AZ.

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