Kunal Bothra's trading ideas for this week | Economic Times

There might be a few phases of correction and consolidation in the PSU banking space, but the larger trend for these stocks seems to be on the upside, says the independent market expert Kunal Bothra. Excerpts from an interview:It has been quite a week when it comes to some of those midcaps. We have seen deep gashes in the week gone by for SAIL and Varun Beverages who lost out around 9%. Within the small cap space also Firstsource Solutions, Justdial and Sonata Software slipped. Is there anything that is particularly catching your eye on the charts from these losers?First of all we need to understand that this is a phase of the markets where we will enter into a sort of consolidation, whipsaw or a volatile band. So there are bound to be a lot of stocks which have rallied up significantly and are now trying to ebb off the gains. So a number of stocks which you mentioned such as SAIL, Varun Beverages, Trent, etc had seen a phenomenal rally. And I think on the backdrop of that you are bound to see some bit of profit booking happening to these names. So this could be attached to some sort of news flow or some sort of an event which could pan out the correction. But a correction into these names could actually be termed as healthy kind of a dip. Now when you look at the broader call on the midcap and small cap indices, many of these stocks from the midcap and small cap index are still looking extremely strong. When you see such kind of a market reaction where the index goes into a consolidation where one odd day of price uptick happening into one sector and the other sector tends to perform very well the next day then I believe that is a sign of consolidation. So in that kind of timeframe and that kind of zone it is bound to be that many of these midcap and small caps could play a bit of volatile kind of price action. Out of the names which you mentioned specifically, SAIL, I believe could be very interesting, not just from near term view but more from positional as well as from longer term view. I have been very bullish on metal names and I maintain the stance for many of these metal stocks. So if SAIL ebbs off another Rs 4 or Rs 5 and say comes back to that Rs 65 or Rs 60 odd zone, that could be a good enough level where one could look to accumulate the stock at those levels. What will be your view on some of the PSU banking names? Do you think names like Canara Bank, PNB, BOB are still looking good despite the last day’s fall? Yes, I think the larger part of the trend for these PSU banking stocks looks fairly attractive to me. Many of these stocks have challenged their previous swing highs and have managed to break past above that. So there was this phase of rally for PSU banking names in October or November end to December mid where these stocks had made a rally of almost 55 to 60 per cent. So many of the stocks have actually more than doubled from their 52-week lows as well.The rally which started off from November to December mid and had seen a bit of a pause is now back as we are seeing a continuation rally into the PSU banking names. The best part about the rally for the PSU banking stocks is not that you have just very specific PSU banking names which are doing extremely well. Canara Bank, Indian Bank and so many of these other stocks have also done very well in the last couple of weeks. So I believe that there seems to be now a bigger trend, bigger trade which is evolving into these PSU stocks. You might have few a phases of corrections and consolidations into these spaces time and again but I think the larger trend for these stocks seems to be on the upside. I would not be surprised if SBI might be one of the few stocks which could probably hit even a fresh 52-week high for itself over the next couple of weeks or over the next one or two months. What are your top ideas for going into the next week?My focus is on a couple of midcap names and there are two ideas which I am coming out with. First one is a buy on JSW Energy. Now it is interesting because mid of the previous week we had seen the stock moving up significantly higher. There was this one strong candle day for the stock price where it moved up from Rs 65-Rs 66 odd levels to jump up to almost Rs 74. Then it saw two days of pause and on Friday we saw the stock closing at the highest point of the day as well. I believe that JSW Energy is a stock which is in strong momentum so I would suggest a buy with targets of Rs 83 and a stop loss Rs 72. And the second one would be again an interesting pick. It is a buy on STC India. We generally do not talk of the stock that often but on the charts it is forming a classic bullish flag pattern on the daily charts. In fact in this consolidation of the flag pattern the stock has just about come back very close to its 50-day moving average. So I would sense that if the 50-day moving average support holds for STC India, this could be an interesting bet in the near term. I would suggest a buy with a positional target of over Rs 90 and a stop loss can be kept at Rs 70.