Chance of market Bounce back-If market sustain above 4,050. If it were to do so then definitely we would see a bounce back.
There are two 200-day moving averages. One is the exponential and another one is simple moving average. Simple one is at 4,065 and exponential is at 4,052.
Actually, the intra-day low was at 4,052 a little earlier and it was hovering at that region. We need to see whether it breaks that support level decisively or not. Otherwise there would be a bounce back.
Normally when you test 200-day moving average at one go that means after it tested the 50-day way up at 4,365 one after another. 100-day moving average 144 and 200-day, all have been tested at one go. Actually, it raises the possibility of bounce back but for that it has to sustain above 4,050. If it were to do so then definitely we would see a bounce back.
Stocks to BUY
Anil Manghnani of Modern Shares & Stock Brokers said investors could buy Reliance on every decline. "Reliance is still a buy on every decline. This is an opportunity to get into Reliance. The immediate support is at about Rs 1,680. They are lower levels but at Rs 1,680 at least from an investment point of view you can start buying," he added.
On Tata Steel, he said that investors could enter between Rs 525-540 levels. "The way the stock broke yesterday was very discouraging. A huge amount of delivery base selling has taken place. May be the bounce whenever it comes may not be as sharp in that stock. If you are looking to get into the stock right now, between Rs 540 and Rs 525 is where you would start buying into this stock," he said.
In real estate, Manghnani feels that investors could look at Unitech and DLF. "You could look for some buying opportunities in Unitech anywhere between Rs 460 and Rs 439. DLF is still strong and has not broken the listing day lows, which was around Rs 540-550. So, closer to those levels that also would be a buy," he said.
Manghnani is also bullish on power stocks like Reliance Energy and Torrent Power.
"Torrent Power is showing quite a lot of strength in this market. It is trading above the Rs 85 mark and has headed towards Rs 95. I think Rs 99 is its all-time high, so still a lot of momentum left in that stock. Reliance Energy has been a front-runner in the last month towards the fag end of this rally up to 15,800. It moved quite sharply from Rs 600-800. Still a lot of strength is left and I look to buy into this stock somewhere between Rs 690 and Rs 676. In the range, I would look and buy into Reliance Energy. When the market bounces back, it should be one of the sharpest to bounce back," he added.
Anand Tandon of Gryffon Investment Advisors feels that technology will outperfrom from here on. "I am looking at a scenario where the overall availability of capital is lower. Hence, I am looking for companies that have better use of capital, and IT falls into that category. The fact that the rupee has become weaker also helps. The business environment has been strong so far. I am assuming that it will continue to remain strong. If that assumption is tested we have to change our view but for the moment it looks like orders are not a problem. If margins get restored in rupee terms, then this is clearly one sector, which will outperform from here on," he added. Speaking on the auto sector, Tandon said, "In the near-term, the outlook doesn’t look all that bad. It has been a sector, which has somewhat underperformed. It is much less likely to get thrashed when the money goes out. Those stocks, which are over owned, fall first and we have seen that in the last few days. The near-term availability of money is likely to improve as a result of regulatory action. I wouldn’t be very surprised if the market becomes a little worse prompting the RBI to come back and cuts down CRR for instance. I think that’s a sector where one should be overweight on."
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