2 trading picks for Monday: Kunal Bothra

In a chat with ET Now, Kunal Bothra, Independent Market Analyst, says Canara Bank and Wockhardt Pharma are the two top trading bets for Monday morning. Edited excerpts:

ET Now: Nifty at 9650 was a fab finish. What next? Are we going to consolidate or will the momentum in the market going to continue?
Kunal Bothra: Last week was a week of consolidation after the two big days from 9350 odd levels on the previous Thursday and Friday.

The index largely remained in a flattish kind of a range.

I think 40-45-50 odd points was largely the range for the index throughout the last week.

But largely, if you look at the internals of the markets there had been a lot of sectoral churns.

In the middle of last week, pharma stocks managed to come back strongly.

Whether it was a dead cat bounce or a rally which will sustain, would be more visible in over the next couple of weeks.

Nevertheless, there was a decent 5-10% comeback in many of the largecap pharma names.

Post that, we saw a good comeback for the tyre stocks etc as well and these stocks maintained their momentum.

When the index consolidates and many of these sectors and stocks they keep on churning in this consolidation I would take that as a positive sign.

On the other hand, many of the largecap stocks which had led the rally, have not corrected significantly.

Stocks like L&T, ICICI Bank, even Reliance have gone into consolidation.

I would say this is a consolidation phase and once this consolidation gets over, the index should breakout on the upside once again.

Just to add one more point, the global markets are showing remarkable strength and last week also we saw a good comeback from the US markets, Asian index as the European markets as well.

Till the time the global picture is intact on the positive side, I would expect the momentum to continue for our markets as well.

ET Now: Any good trades in the auto pack?
Kunal Bothra: There are a lot of auto stocks which are buzzing.

Tata Motors had a big and a good consistent recovery in the last weeks odd. M&M has been one of the favourite names in terms of trading perspective post its result.

But I believe one of the other stocks which has not been in the limelight but has managed to show some good trend is Hero MotoCorp.

The stock is trading above Rs 3800 levels.

This is one of the few names which one can look at from the auto sector.

The stock is in good momentum and it has broken out of long term chart patterns.

The intra-day and intra-week volatility for Hero MotoCorp has been bought into.

That is a sign of strength and with volumes picking up, it is a sign of bigger hands maintaining their bullish stance on the stock.

So, from the auto pack I would pick up Hero MotoCorp.

I had earlier targets of Rs 3880 on the stock.

With the move which we had seen last week, traders could revise the targets to almost Rs 3950-3980 on the Hero MotoCorp and maintain their long stance.

ET Now: While you believe that metals are in a structural bull run of their own, what should one and how should one trade in these stocks during the intermittent corrections?
Kunal Bothra: Yes, metal stocks had a off week. Last week Tata Steel, Vedanta and even Hindalco which opened with a decent gap last week, could not find that follow through.

But in the larger scheme of things, many of these metal stocks are still showing some strong bullish signs in terms of price.

The trend which you had seen for a lot of these metal names is that when the RSI level on the weekly charts cross the 60 mark you see a lot of momentum coming across for many of these metal names.

Hindalco, Tata Steel as well as JSW Steel are the three metal names which are very close to breaking this on the weekly charts.

Except for the subdued performance of last week, if the metal stocks manage to show any sort of breakout once again on the price side, you should be looking to buy these names.

The approach over there is very important. Rather than selling these stock on rallies, these should be bought on dips because if many of these stocks come back to their support points, I would expect the risk reward to be very favourable for initiating a fresh long trade.

Traders can look at JSW Steel, Hindalco as well as Tata Steel.

ET Now: What stocks would you recommend to our viewers for Monday morning?
Kunal Bothra: Well there are two stocks which I would want to recommend; one is from the banking pack and that is a buy on Canara Bank.

I believe that on daily charts the stock has confirmed an indicator breakout or an ADX breakout as well as an RSI breakout on the daily charts.

The stock has corrected from Rs 415 to Rs 345-350 levels.

I am sensing that this 15-20% odd correction in Canara Bank is probably over and with the indicator giving a breakout, the stock can continue its upward traction once again.

So I am suggesting a buy on Canara Bank at current levels with a target of Rs 400 and stop loss at Rs 342.

The second is a buy on Wockhardt Pharma.

It is an interesting chart in the short-term timescale.

Earlier last week, Wockhardt Pharma saw a good price and volume based move.

Post that, it went to a three or four day consolidation but still maintained to close closer to that Rs 625-630 range.

If this bullish chart pattern gets completed, which is pennant formation on the hourly charts and the stock breaks out of Rs 630 and closes above it, it could confirm a swing breakout once again and the stock can see a continuation of move what we has last week.

So a buy on Wockhardt Pharma is what I would recommend at current levels with a target of Rs 674 at least, keep a stop loss of Rs 606 and look to go long.