Two stocks to trade in on Monday morning: Manav Chopra, Monarch Networth Capital

In a chat with ET Now, Manav Chopra, Head - Technical Analyst, Monarch Networth Capital, says a buy on Marico and Divi’s labs would be part of his trading strategy on Monday. Edited excerpts


How would the Nifty actually positioned because on many days we have seen very lacklustre sideways trade and 8700 clearly seems to be a bit of a ceiling for the index?

Yes. The markets are in a short-term corrective decline since September highs of 9000 levels and if we look at the formation very closely, we are declining in a falling channel pattern, which is forming a series of lower tops and lower bottoms. Recently, we witnessed stiff resistance close to the levels of 8700-8750 which is the upper band hurdle where the markets would witness selling pressure in the near term perspective.

We are basically seeing cool off of the six months of strong upmove that we have seen and this is going to be more healthy in nature. This is more or less a corrective decline. As long as we trade below 8700-8750, the index would witness selling pressure at higher levels and there is another possibility whereby we could see retest of its recent lows of 8600. I think in the medium term perspective, this corrective phase would continue for another month or so until and unless we are below 8750 and the lower targets that we are looking is close to 8450-8500.

Chartically, how is Reliance looking after that big lower move in Friday’s session post the numbers?

Yes Reliance has been an underperformer recently and it faces stiff resistance around the levels of Rs 1100-1120 which is its multi-year breakout range. Looking at the overall scenario and the range that we have seen for Reliance in the last two or three years, it can be a good opportunity to enter at lower levels. Rs 1050 and Rs 1040 are very strong support clusters. I do not see Reliance going below these support levels on the immediate basis. So for a risk reward ratio entry, I think the stock can be entered at the current levels but the good momentum or a good upswings can be witnessed only if Reliance closes above Rs 1120 on the upside.

On NCC there was a big spurt, a breakout of sorts. How would you go about trading this one next week and do you sense that one could still set this stock abuzz or do you think it is going to plateau out come next week?

If we look at the monthly charts, the stock has come out of its consolidation range of past four to five months and the previous resistance was close to the levels of 8990 and being a decisive close above 90 with a record volumes, a good momentum could come into this stock and there is an important support around the levels of Rs 85 and Rs 88. These are the important clusters and I do not see the stock going below that.

Since we have already seen a good run up on the intraday basis, there could be a few days where the stock could consolidate or just give a short-term correction. I think it will be a good opportunity to get going at lower levels because I think in the medium term perspective, this stock could rally higher and test its previous high which was 115. So I think there is another 15-20% upside in a short term perspective and one should look to buy at correct levels.

Any trading strategies for Monday morning?

My first call is a buy on Marico. The stock has actually taken support on its long-term trend line drawn from its important lows and the stock also has been consolidating near its long-term averages on the daily charts. There is a minor higher bottom formation and overall looking at the trend the stock has been forming a series of high tops and bottoms so after a recent correction I think it is a good time to enter at the current levels because the risk reward ratio is quite favourable, recommend a buy at the current levels and on dips toward Rs 280 with a stop loss of Rs 275. We expect an upside target of Rs 310.

My second call is a buy on Divi's Laboratories. We have seen a good momentum into the stock today on the intraday basis and the stock has seen a good reversal from its lows. The volume also indicates a good breakout on the intraday chart. So I think in the near term perspective Divi's Lab would see some sort of a good sharp momentum for next two or three trading sessions and we expect an upside target of Rs 1320, maintain a lower stop loss at Rs 1250.