Two stocks Kunal Bothra recommends buying next week

We have seen so many times over the last many years that it is the large-cap names that form building blocks of any kind of a major recovery or rally that happens, said independent market analyst Kunal Bothra. Edited excerpts:


If you were to talk about some of the trends that you are seeing for the broader markets, would you say that it is a clear time right now to stick with quality and be a little cautious when you are approaching trading?

Well absolutely yes. It makes a lot of sense to stick with quality. There is no doubt about the fact that it makes a lot of sense to park money towards quality large-cap names, the ones which can withstand a lot of this market turmoil and still hold strong. We have seen so many times over the last many years that it is the large-cap names that form building blocks of any kind of a major recovery or rally that happens. Then slowly and steadily, when sentiment comes back, the market tends to graduate towards mid-and small-caps.

In the short term, there are a lot of mixed factors which is why the markets have been on an edge. We are now getting into that dull phase of the market; typically we say that do not short a dull market but then given what is happening across the globe, it makes prudent sense to try and be on the waiting list and wait for the markets to give clear signals.

On the upside, 17,500-17,550 will act as resistance; till the time we do not break past above those levels, we would probably lookout for opportunities to try and build up consolidation positions. On the downside, 17,000-16,850 is a very strong support. We have managed to bounce off twice in the last three-four weeks from those levels. So these are the two very important levels to watch out for from a short-term trading perspective.

What are your picks heading into the new week?
So, I will recommend a couple of buy calls and the first one is Varun Beverages. It has a very interesting chart. When you look at the last two weeks’ price patterns, it is forming a very classical kind of an ascending triangular pattern, where the stock has been making consistent attempts towards the Rs 950 mark. Every attempt towards Rs 950 levels has increased up higher. We call this a classical ascending triangular pattern and the stock is just about on the verge of confirming a breakout of this resistance. I would suggest a buy on Varun Beverages, with a target of Rs 1,025 and stop loss at Rs 925.

The second would be a buy on HDFC Bank. Now, this is interesting because the stock is still trading in a range but when you look at the price patterns on the hourly charts, it is forming what we call a spring coiled kind of a pattern, wherein the range is getting narrower for but the stock is trying to take support closer to that Rs 1,490 mark time and again. So keeping Rs 1,475 as a broader stop loss, I would suggest a buy on HDFC Bank. I am expecting that this consolidation would result in a breakout on the upside. Rs 1600 is a near term target for the stock.