2 top stock recommendations from Vinay Rajani

"The resistance I see in Nifty is around 24,100, that is the crucial resistance. So, still we can expect extension of the pullback. Though after 300 points recovery, there could be some intraday dip, but I think dip should be bought into an intraday," says Vinay Rajani, HDFC Securities.

The 300 points bounce back that we are seeing in trade, is it just because the RSI was below, was in the oversold zone or do you expect this bounce back to even sustain going forward at least for the next few sessions?
Vinay Rajani: Yes, RSI was oversold but it was not the only indicator and this is not that much reliable unless we get the price confirmation. So, today we are getting some price confirmation. Yesterday, we have seen that some breadth indicators improved, breadth was not that bad and if we go by the derivative data, the put call ratio which was at 0.85 in yesterday's session, today it has moved up to 1.14.

So, as Ansh explained, there has been some put writing happening at the lower level and derivative indicators are suggesting that there should be a meaningful bounce back here. So, already Nifty is up by more than 300 points, but I still believe that the way we have fallen, Nifty has almost fallen by 11% from the all-time high and it is taking support around its 200 DMA also.

And there is one upward sloping trend line also adjoining the October 2023 low to the June 2024 low when election results were announced in India. So, if we adjoin that trend line, the upward sloping trend line, the recent low which was there, it exactly reverts from that level. So, there are multiple evidences which are giving us the indication that
Nifty should give some meaningful bounce back.

The resistance I see in Nifty is around 24,100, that is the crucial resistance. So, still we can expect extension of the pullback. Though after 300 points recovery, there could be some intraday dip, but I think dip should be bought into an intraday.

If Nifty comes around 23,650 odd level, around 100 points correction or so from here, can be utilised to create a fresh long position and ultimately I am expecting Nifty to reach a target of 24,000 to 24,100 where call have been written.
So, there are multiple evidences, some under asset classes like dollar index which was rising and that was giving a negative sentiment in the equity markets, that has also started falling and gold has also started rising along with the equity markets.

So, Asian markets are doing well and some indicators in the derivative side are suggesting that the market should continue to do well and the next target for the Nifty comes in at 24,000 to 24,100.

But in past also we have seen that after multiple days of decline, there has been some bounce back of around 200 points or so. So, how is this bounce back that we are seeing of 300 points different than what it was earlier and why are you so confident that there could be a meaningful upside even from current levels here?
Vinay Rajani: So, the previous bounce we saw in the market was when US election results were announced and that was event-based recovery and some short covering was there. It did not sustain at high level. So, it was more of an event and news based recovery. But this time we are getting some indication from the data. So, there is no news. The data indications are there like RSI was oversold. Along with that, there was a crucial multiple support zone was there and derivative data started improving and there are no further negative news coming from the global market as well as any news from the domestic market.

So, whatever news negativity was there because of the earnings is already priced in. Any further, any fresh bad news only can drag the market further down, but I do not see that is happening. So, most of the negatives are already discounted and now data is improving, so I am expecting a meaningful bounce back. Today, it has risen by 300 points. I am still expecting more 300 points upside from here.

Any stock specific recommendations or sector calls or theme calls?
Vinay Rajani: So, basically, I am bullish on the private sector banks. Today, it has done well and we have already issued Federal Bank. So, Federal Bank looks good to us. So, Federal Bank can be considered. The current market price of the Federal Bank is around 209. So, it has just registered a new all-time in this kind of market, so it has been resilient.

So, 209 is the price, I am expecting it to reach a target of 220 and I would suggest a stop loss of 202 here. So, overall, Federal Bank looks good to me. And from the IT space, Mastek is the midcap IT company which we like. So, the current market price is 3200, 3210. So, at this price, one can initiate a long position. Positionally, we are bullish on this stock and the probable target we see in the Mastek is around 3435, so that we have already given to our clients. Our bullish call is open. So, we are bullish on Mastek and the Federal Bank, both we have already recommended to our clients.