Top Stock Picks for Short-Term Investments: Jigar Patel, a financial expert at Anand Rathi, recommends three promising shares to consider for the upcoming 3-4 weeks.
Top Stock: Stocks to consider for short-term investment: The Indian stock market benchmark, Nifty 50, experienced a drop of nearly one percent for the week ending January 17, marking the second consecutive week of losses. Factors such as underwhelming Q3 earnings, foreign capital outflow, caution ahead of Budget 2025, and uncertainty surrounding Donald Trump’s tariff policies contributed to the negative market sentiment. With Trump set to return to the White House on Monday, January 20, investors are closely monitoring the potential impact of his policies.
Market experts anticipate continued volatility in the short term, driven by both domestic and global factors. The market is expected to proceed with caution due to moderate Q3 expectations and ongoing FII outflows, which could lead to increased volatility. Additionally, the market will be closely watching the policies and statements of the incoming US president, particularly in relation to tariffs. Any signs of higher inflation in Japan or a more stringent policy from the Bank of Japan could further impact market sentiment, according to Vinod Nair, the head of research at Geojit Financial Services.
Given the fragile market sentiment, experts advise careful consideration when selecting stocks. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, recommends purchasing shares of IRCTC, Chennai Petroleum, and Rico Auto for the next two to three weeks. Here are the details of his recommendations:
IRCTC | Previous close: ₹779.20 | Buying range: ₹775-780 | Target price: ₹860 | Stop loss: ₹740
On January 14, 2025, IRCTC formed a bullish harami pattern, followed by a strong 5 percent rally, indicating a potential trend reversal. This pattern emerged near a key historical support level from September 2023, underscoring its significance. Furthermore, the RSI on the daily chart has displayed a bullish divergence, suggesting a shift in momentum and bolstering the bullish outlook.
The combination of bullish price action, support at a critical level, and RSI divergence indicates a potential upside move in the market. Based on this technical analysis, we recommend taking a long position in the price range of ₹775-780. To manage risk, a stop-loss should be placed at ₹740 on a daily closing basis, while the target for this trade is set at ₹860, providing a favorable risk-reward ratio, as stated by Patel.
Chennai Petroleum Corporation, with a previous close of ₹590.95, presents a buying range of ₹585-595 and a target price of ₹650, with a stop loss at ₹560. On December 19, 2024, the company formed a significant bullish engulfing pattern, followed by a 15% rally, indicating strong buying interest. Despite a pullback near the low of the bullish engulfing candle, the stock consistently closed above it, suggesting that support remains intact and hinting at a potential reversal. The RSI also shows a bullish divergence, further supporting the possibility of upward momentum.
Considering these technical factors, a long position is recommended in the price range of ₹585-595, with a stop-loss at ₹560 on a daily closing basis. The target price for this setup is ₹650, offering a favorable risk-reward ratio for traders looking to capitalize on the potential reversal, according to Patel.
Rico Auto Industries, with a previous close of ₹91.23, has a buying range of ₹90-92 and a target price of ₹103, with a stop loss at ₹85. The company recently formed a bullish triple bottom pattern accompanied by a bullish divergence, indicating a potential trend reversal. Additionally, the stock found support at the monthly CPR, a crucial zone suggesting strong buying interest, and reversed upward. In the previous trading session, it surged by 4.66%, further confirming bullish momentum.
After considering these factors, it is advisable to take a long position in the price range of ₹90-92, with a stop-loss at ₹85 to mitigate potential losses. Patel suggests setting the target price for this trade at ₹103, which presents an appealing risk-reward ratio.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.