Trading ideas: Stock recommendations for next week

Benchmark equity indices scaled new milestones during the week gone by. The NSE Nifty index not only surpassed the 17,500 mark but registered a high an inch below 17,800 mark. The 50-share index rallied more than 1% for the week ended September 17. Now the daily chart of Nifty spot depicts that the index has been trading in a rising channel since the beginning of Aug 2021.

The upper end of the channel is placed near 17,900-18,000 levels which might act as a strong resistance going ahead. Also, 18,000 is a psychological level and hence it might be a bit tough for the index to clear the same at one go. Thus we expect some choppiness going ahead. On the downside; supports are placed at 17,500-17,300. Only a breach of 17,300 might halt the ongoing momentum.

With regards to Nifty Bank index, we witnessed smart outperformance by the banking sector. The Nifty Private Bank index and Nifty PSU Bank index surged by around 5% last week. In line with our view the Nifty Bank index surpassed the all-time high of 37,709 and even surpassed the 38,000 levels. We continue to remain bullish on the banking index and expect it to gradually reach 40,000 levels. In order to capture the move, safe players can opt for bull ratio spread in 38000 CE and 40,000 CE of October 2021 monthly series. The momentum might fade away once the index breaches 36,500 mark.

Stock Recommendations:

HDFC Bank | Buy | Stop loss: Rs 1,530 | Target price: Rs 1,630
The stock is yet to clear its lifetime highs similar to its peers. The price action indicates that HDFC Bank could catch up in the coming weeks thus making it a lucrative buying candidate.

Mahindra Holidays Resorts India | Buy | Stop loss: Rs 226 | Target price: Rs 252
After a range breakout above Rs 226 the stock travelled above Rs 250 and has now retested the breakout level. Thus traders can go long in it with given trade set up.

(The writer is AVP – technical research, Anand Rathi Shares & Stock Brokers, views expressed are personal)