“So overall the market has corrected, yes, but right now we are close to a very strong support zone around 25,700-25,720. That is the support zone for now, which also coincides with the 89 AMA on the daily chart,” said Seth.She pointed out that options data shows that call writers have been particularly active, making the second half of the session crucial. According to her, even a lockdown around current levels could pave the way for an interesting next step.
“If we close this zone, the next step would be very interesting because we are close to a very important support zone, both in Nifty and in the banking index. If you see that the PSUs are moving, and if you see the banking index, it is near the support zone of the 20 DMA. So as of now, the chances of recovery are quite high,” she added.
Given this setup, Seth advised traders to be cautious with bearish bets. “I would avoid it. If someone has taken a short position, he can liquidate his position, and someone looking for a counter bet can add some long positions in Nifty for now,” she said.
On stock-specific opportunities, Seth said she continues to prefer select PSU and auto names. “From the PSU space, we like SBI. If you look at the chart structure, we have seen some decent movement, some profit taking, and again the stock has moved towards a very good support zone around 995-1,000. That is the support zone for this counter,” she explained. She expects the State Bank of India to perform well from these levels. “Looking at the overall chart structure, SBI can do well at the moment, and we can even expect a strong upward move above the recent highs. If we keep a stop around 994, it is a buy, and the target should be around 1,030-1,035,” Seth said.
Another stock on her radar is Ashok Leyland. “This counter has provided very strong upside and has a very strong chart structure above all major moving averages. I believe we could see follow-on buying at least towards 195-197, which is the level I’m looking at,” she noted, adding that options data shows unwinding at the 190 call, a development she called “very interesting.” She suggested a stop loss around 185 for long positions.
Meanwhile, sector volatility remained high, especially in capital goods, infrastructure and energy stocks, which have been under pressure since reports emerged that Chinese companies may be allowed to bid again for government contracts.
Seeking clarity on this front, ET Now noted that while uncertainty persists, news flow has caused sharp swings in related stocks.
In response, Seth said she doesn’t expect a sharp downside from current levels. “Overall, I think we see some profit-taking today for the second consecutive session, but I don’t expect a big decline at this point,” she said.
She suggested investors focus on relatively stronger parts of the market, rather than chasing volatile themes. “I would actually try to focus on areas where we have seen a decent decline. If you focus on the major indices like Nifty and Bank Nifty, they are at very good levels and I would prefer to buy these counters,” Seth said.
She also reiterated her preference for PSU bank stocks. “The PSU banking stocks are doing quite well and are quite stable, so you can focus on that area rather than focusing on something that could remain under pressure for a day or two,” she said, adding that she does not expect a big surge in capital goods and infrastructure in the near term.
According to her, autos and PSU banks currently offer relatively better risk-reward value. “The sector that looks good is the auto sector and apart from that, the PSU banking index looks good at the moment,” Seth concluded.
As markets grapple with continued selling pressure, all eyes will now be on whether key support levels hold and set the stage for a technical recovery in the coming sessions.
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