Kunal Bothra’s two top trading picks for next week

Go with two buys. Both Godrej Consumers and D-Mart have been relatively low beta and showing signs of decent bottom formation, said Kunal Bothra, market expert, in an interview with ETNOW.

Edited excerpts:

Once again we have attempted to go above 12,000. The May series has been very choppy but now the June series has kickstarted. What should one watch out for?
The momentum is slowing down for the indices. When I look at one part of the picture and consider the way the Nifty and Bank Nifty have shaped up both in terms of the price behaviour and the indicator behaviour, especially after the exit poll,the Nifty has moved higher. But then the oscillators have moved lower and that is a worry because it generally indicates that now the index would either go through a period of consolidation which could last for at least a couple of weeks or a period of mean reversion or retracement. That could take off around 300 to 400 points on the Nifty.

If one looks at how the put call ratio panned out on Friday, that was one of the reasons why you saw that intraday selling pressure on the Bank Nifty as well. The put call ratio had reached an extreme. I think 1.5-1.52 was the reading on the put call ratio on the monthly expiry. That is one of the reasons why I believe the markets shed some intraday gains. Next week, the index should be in a range, especially the Nifty and the Bank Nifty. Nifty could be in a 200-250 point range, with support at 11,800 and closer to 12,050 which was the previous resistance. That should be the range for the index for the next week.

For the week to come, what are your picks?
Go with two buys and both of them are from stocks which have been relatively low beta and showing signs of decent bottom formation. The first one is Godrej Consumers. That stock is doing exceptionally well. On Friday, it managed to break out of a swing resistance. There is also a pattern of inverse head and shoulder getting completed for the stock and it has been trading in a range for the last three-four weeks.

It is good to see a breakout finally for Godrej Consumers. It is a buy with targets of Rs 715 and a stop loss at Rs 670. And the second would be a contra one — D-Mart. Even that stock, on the hourly charts, is forming a cup and handle kind of a pattern. It is trading very close to the breakout of this cup and handle pattern which is closer to 1325-1326 on spot levels. That is a buy in anticipation of a breakout targets of Rs 1,360 and stop loss at Rs 1,300.


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