2 stock ideas for the coming week by Soni Patnaik

Soni Patnaik of JM Financial Services says since Bank Nifty is about to lead the next leg of the rally, my top pick comes out to be ICICI Bank. “So ICICI Bank is on the cusp of giving that monthly breakout,” she told ET NOW in an interview. Edited excerpts:

Nifty scaled 21,000 this week but will this runup continue? And not just Nifty, let us talk about Nifty Bank as well given the fact that a lot of policy actions also kind of make this particular sector jittery.
The broader outlook for Nifty continues to be bullish. There is a bullish undertone.

The indices are in the overbought zone and historical data suggests that whenever such overbought zones have been approached, there has been a correction. Maybe if we were to witness a corrective dip in this current scenario, it would be easier to define your risk-reward ratio. But this corrective dip can only get confirmed if Nifty breaks hat 20,800 spot. Until then, it is wise that you ride the upside momentum.


And it looks like that Bank Nifty is going to be the one which will lead the next leg of the rally. In the Bank Nifty there is no sign of exhaustion. With a very good base of 46,500, Bank Nifty is set to take out 47,500 plus levels in the coming week. It is quite clear that Bank Nifty can outperform Nifty for the moment. You can pick out stocks which have underperformed all this while. They are at the cusp of fresh breakouts, especially in the banking pack.

The broader outlook remains bullish. If we get any corrections, it would be even better and enjoyable if you just ride the momentum.

Given the movement that we have seen in the banking space, this particular week, be it private or PSU banks, both have participated well. Especially on Friday, the private banks were seen to be holding themselves in comparison to the PSU banking rally. Going ahead, which segment between these two one should be watching out for?
Private banks were underperforming for a very, very long time. It is time where it has started leading. HDFC Bank especially has led the private banks out of the woods. And you can see fresh breakouts coming in Axis. We have even seen ICICI Bank, Kotak Bank and to some extent, IndusInd Bank also outperforming. So definitely, I think you should switch to private banks, which are at the cusp of a fresh breakout. And I think one of the best outperforming stocks in this current space could be ICICI Bank.

The PSE index has witnessed a 6% upmove. Amazingly, one of the top gainers on the PSE index in the week gone by was LIC. Let us talk about the insurance space as a whole. No doubt, we have seen the PSU sector getting a thrust also from the state election verdict but in the insurance space, we are seeing a renewed vigour. Do you think that will continue going ahead?
We can see some momentum. It would not be, of course, all the stocks from the entire pack. It would be hand-picked, cherry-picked, like the best ones that can outperform. At the top of my mind, I can remember SBI Life giving out a very good breakout; technical derivatives data is quite strong. It is continuing with its momentum. I think it has formed a very strong base of about 1420. And, you know, going ahead, it should be crossing 1550 odd levels. SBI Life could outperform all its other peers.

And the second could be LIC Housing Finance. think the sector has some momentum. But it should not be that all the picks, all the stocks see with that momentum. I think it is best that we pick out stocks which are giving you that momentum.

Let us put the spotlight then on which are the stocks that one should watch out for in the coming week. So where should one focus and put their money in?
Since Bank Nifty is about to lead the next leg of the rally, my top pick comes out to be ICICI Bank. So ICICI Bank is on the cusp of giving that monthly breakout. Last two to three months, the stock was constantly facing resistance around 1000-1010 odd levels. It has finally broken above that level. I think it is going to lead a fresh rally from current levels. Keep a stop loss of 990. You can see targets of 1040, and 1060 plus levels coming in the few coming days.

And the second pick would be from the auto-ancillary: Samvardhan Motherson. It has given a good breakout as of today's closing with good long build-up positions. So you can buy the stock while keeping a stop loss of 92.8 and targets of 100.