Recommended stocks to buy or sell: Raja Venkatraman recommends three stocks to buy today—20 February

Stock market recap for 19 February

After witnessing some sharp decline on 19 February, the markets are now resolved to hold on to the much hallowed 22800 and survive the intense selling pressure. While the entire market was bracing for a decline, as we mentioned yesterday, the intraday support around 22800 in Nifty continues to hold.

Nifty remained subdued and the inability to stage a good recovery remained at a distant. The rally sell approach is being adopted that continue to hamper the recovery attempts. With the absence of encouraging triggers to we need to tread to move ahead carefully with Nifty as it tries to stabilise the trends ahead.

Concerns have been increasing amongst the Indian market participants as crude oil prices have been rising over the last few sessions, putting pressure on the rupee. There is now a resurgence in the dollar, majorly due to persistent outflows from foreign institutional investors (FIIs), which may also negatively impact the domestic currency.

Dr Reddy's Laboratories, TCS, Hindustan Unilever, Infosys, and Adani Enterprises were among the major losers on the Nifty index, while Bharat Electronics, Hindalco, L&T, Axis Bank, and Eicher Motors were the top gainers.

As a relief rally emerged, we once again witnessed the BSE Midcap index rising by 1.2%, and the Smallcap index gaining 2.4%t. Sector-wise, IT and pharma lost 1% each, while media, metal, PSU banks, realty, and capital goods sectors saw gains of 1-2%

Outlook for trading

Going into today's trading action, the market remained mixed, as the attempt to suppress the bearish sentiment has been successful so far. Each sector has some strong performers who are managing to keep the bullish sentiment alive. However, at this juncture, one should take note of the deep correction that we have witnessed, and the fall could escalate once key support levels at 22800 are broken.

As a rebound is in progress, the resistance continues to remain at 23200, with the “max pain” point at 23000 that will come into contention as the possibility of a rebound is unfolding. The levels around 23200 continue to hold the recovery at bay. A move above this area is needed; hence, it would be a testing phase for the trends ahead.

The heavy "put writing" at 22800 is now holding the fort for the bullish camp. The put call ratio (PCR) has moved slightly ahead above 1 in BankNifty, highlighting that an attempt is being made to produce a rebound by the bullish camp.

Currently, the bearish ADX/DMI has not been able to establish dominance, which is helping the bullish camp revive. This signals that trends are attempting a rebound from lower areas, as can be seen from the chart below. However, as trends are still under pressure, we still have to bide our time, as the last few sessions have been quite range-bound.

Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman:

• Associated Alcohols & Breweries: Buy above ₹1,130, stop ₹1,100, target ₹1,250

This counter from beverages industry has found some strong support after the recent decline and footing and the steady rise in prices on Wednesday is seen in action. The rise of prices of this counter has been quite steady and volume lead rise could now result in some revival. As robust momentum is seen building up we can look at the whole setup heading higher once again, consider going long.

• Camlin Fine Sciences: Buy above ₹152, stop ₹144, target ₹167

Even as prices dipped, the momentum readings indicate an upmove that could help the prices rise quickly. As trends are looking promising with formation of a long body candle one could consider a strong thrust to the upside. With near-term resistance turning into support, one can look to initiate a buy.

• Kaveri Seed Company: Buy at ₹995, stop ₹960, target ₹1,095

After the recent upmove, KSCL has displayed a range breakout and the trends in this counter can sustain. The strong display of momentum clearly highlights that there is showing some more room for the upside. As every dip sees demand at lower levels, it's best to consider this as an opportunity to go long.

Raja Venkatraman is co-founder, NeoTrader.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.