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Kunal Bothra’s 3 high momentum picks for next week

The market breadth has been improving and not just in terms of the advance decline ratio. Earlier, the rally had started from the low beta or defensive stocks like pharma and the IT stocks. Then in the second half of the week, we saw the metals as well as PSU banking pack pick up quite a bit of a pace.

ET Now|
Updated: Dec 14, 2019, 05.57 PM IST
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ETMarkets.com
Kunal Bothra-1200
Hindalco, Ashok Leyland and EID Parry are the three stocks Kunal Bothra, kunalbothra.co.in, is choosing as his trading picks for next week. Excerpts from an interview with ETNOW.

What do you make of the momentum towards the end of the week?
Intra week, there has been a very strong comeback for the Nifty. From those 11,800 marks, it has been a very ferocious comeback. For two or three days consecutively, the market stayed pretty well. What was more heartening was a variety of factors. First of all, the index came back above that 12,000 mark which I believe is a very strong psychological breakout for the indices.

The second and the most important part was the market breadth improving and not just in terms of the advance decline ratio, but stocks which moved up higher, last week. Earlier, the rally started from the low beta or defensive stocks like the pharma, IT stocks and then in the second half of the week, we saw the metals and the PSU banking pack pick up quite a bit of a pace.

When you have such a strong sectoral mix and markets internals, you generally expect the momentum to carry forward. The only one catch over here for the index which I saw looking at the data on Friday post closing was that PCR or the put-call ratio is now at 1.4-1.42 levels. So, over Monday-Tuesday next week, if we see successive price up moves, then there is a high possibility that the put-call ratio may come into an overbought territory. That could call for a bit of short term correction.

What do you make of the metals pack this week? One of the star gainers was metals and was probably led by what is happening in the US?
Absolutely. The metal stocks did fabulously well and many of these stocks were waiting for a breakout anyway. A case in point is Hindalco which closed at a multi-week high at those 205 plus levels, SAIL also has shown a lot of promise. Even SAIL is coming out of a bullish flag pennant kind of a combination and breakout on the weekly charts.

There are some strong indicators on the monthly timeframe as well and many are metal stocks. Tata Steel also did pretty well. JSW Steel had a bit of an iffy run on Friday, but net-net, even this stock is looking quite strong and sturdy. Almost all the stocks from the metal pack did fabulously well for themselves last week and when you have risk-on mode coming back into the markets, these kind of sectors are trader favourites. Many of these metal stocks should see a continued up move, case in point Hindalco and SAIL particularly.

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