2 top stock recommendations from Nagaraj Shetti

"But overall market remains up. Having moved above the initial resistance of around 24,000, I am expecting Nifty to move towards the 24,450 to 24,500 in the near term," says Nagaraj Shetti, HDFC Securities.

And yes, you have markets that are scaling brand new highs every single day, but we are seeing that there are some bouts of profit booking or some sort of a consolidatory phase actually kicking in for the markets. Are you witnessing that on the charts as well?
Nagaraj Shetti: Market has been in a continuous uptrend since after the upside breakout of the range movement. The overall chart pattern is looking still positive, though market is placed at the higher levels. Still, there is no indication of any reversal pattern confirming at the higher levels. There may be some volatility at the highs or maybe a smaller intraday correction in between. But overall market remains up. Having moved above the initial resistance of around 24,000, I am expecting Nifty to move towards the 24,450 to 24,500 in the near term.

Then, what about Nifty Bank actually because everyone is betting on Nifty Bank to lead the charge, to rally ahead, it has been a while that we have seen the private sector banks participate and we are seeing signs of some sort of a participation. But are you seeing some resistance also kicking in?
Nagaraj Shetti: I am not seeing any big resistance at this point of time, around 52,900, 53,000 is going to be a resistance, but eventually we could see a decisive upside breakout in banking sector as well.
What we have seen a sharp upside momentum especially after the general election results and this banking sector has been outperforming the benchmark index. So, currently showing a consolidation around 53,000 levels and eventually this consolidation is going to be a buy on dips opportunity for banking stocks and even private and PSU banking stocks and eventually Bank Nifty could move higher, the next upside target would be around 54,000 in the near term.

Let us not forget that we are entering the month of July and this time the significance of the month of July is even more because we will be having the full real budget coming in for the union budget that all has been waiting for. What is your anticipation when you talk about the sectoral indices? We have seen the PSU index actually see a sharp rally, the banks, the fertiliser stocks actually seeing a sharp uptick on back of that, so are you witnessing some sort of an action on that particular front? Are these the sectors that one should look out at least for the month of July?
Nagaraj Shetti: Yes, I am expecting a further upside for the Nifty during this budget period and as well as if you look at the sectors, banking, especially private and PSU banking, and if you look at the metal stocks and metal sector has declined reasonably and has bounced back from the lower levels, fertilisers and even other sectors like PSU banking, like capital goods are likely to be in the limelight in the near term.

What are your top bets, then what are the picks that you are looking out for? Are they also in the similar pack that is the PSU range or are you looking at some different stocks altogether?
Nagaraj Shetti: Yes, I have two picks, MGL and GNFC, both are in PSUs as well. So, if you look at the MGL, MGL was moving gradually over the last few weeks and today has busted up above the resistance, currently making an attempt to move above the important resistance of around 1,600 levels, so its upside breakout of 1,600 is going to be a strong up move for the stock in the near term.

I am expecting this to move up further and one can look to buy around these levels around 1,600, which is currently quoting and 1,705 is going to be the immediate target, one can place a stop loss around 1,550.

If you look at GNFC, it is one of the fertiliser stock in a downward correction recently. From the highs of 780, 770, it has come down to 660, 670 levels and at the lower levels, it has found the support around 200 EMA.

It has bounced back from the lower support, indicating the formation of higher bottom. The overall chart pattern is looking positive. One can look to buy GNFC around 704.60, 705 and wait for the immediate targets of around 740, 745. One can place a stop loss at 680.