Top stock picks by CapitalVia Global Research: Buy HDFC Bank, UPL

Technical Calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor

Market traded higher; Nifty facing stiff resistance at 10,500

Market traded with positive sentiments but failed to hold 10,500 on a closing basis. With mixed global markets, Indian markets managed to close on a flat note. Global markets traded higher as Bank of England slashed rates by half a per cent. Nifty closed at 10,548.40, adding 6.90 points. Media and private bank stocks traded with positive sentiments whereas public sector banks and realty stocks traded in the red. Nifty Bank closed at 26,487.80, adding 25.20 points from the previous day’s closing.

As per weekly option data, there is a handful of call writing on higher strikes, ranging from 10,500 to 10,700, which shows that Nifty is witnessing resistance in sub-10,500 zone. 10,700 will act as resistance as maximum open interest (OI) for the calls stands here after 11,000 strike. We can witness short-covering move along with addition of fresh position only if Nifty breaches 10,500. Therefore, traders should try to create shorts keeping a close eye on 10,500. 

We can see a big momentum in following stocks: 

Buy HDFC Bank Limited (Above Rs 1,120): 

Target: Rs 1,155

Stop loss: Rs 1,095

The stock is forming a reversal pattern on daily charts and is witnessing a resistance breakout from the level of 1,120. It is trading at its major support level and breakout from the level of 1120 would lead to the stock witnessing bullish movement. Considering the technical evidence discussed above, we recommend buying the stock above Rs 1,120 for the target of Rs 1,155, keeping a stop loss at Rs 1,095 on a closing basis.

Buy UPL Limited (Above Rs 524):

Target: Rs 546

Stop loss: Rs 507

The stock is witnessing resistance breakout from the level of Rs 524 which would lead the stock to show bullish movement. A breakout from this level might lead the stock towards its next resistance zone placed around 547. We can expect a good momentum in this stock for next few weeks if stock manages to hold its key support in the zone of 500. We recommend buying the stock above Rs 524 for the target of Rs 546, keeping a stop loss at Rs 507 on a closing basis.

Disclaimer: The analyst does not hold position in any of the stocks mentioned above.