Ajit Mishra recommends buy on Aether Energy, Sun Pharma; sell on ITC

Ajit Mishra of Religare Broking says that Ather Energy and Sun Pharma have a given a upside breakout after a period of consolidation, while ITC seems to be losing momentum on charts.

Stock Market outlook for Thursday, July 09 by Ajit Mishra

  Markets witnessed a sharp sell-off on Wednesday, with benchmark indices posting their steepest single-day decline in over two months amid adverse global cues.  After opening with a gap-down, the Nifty remained under pressure throughout the session as broad-based selling across heavyweight counters kept the bulls on the back foot. Consequently, the index settled near the day's low at 23,882.05, down around 2.12 per cent.  Sectoral participation remained firmly negative, with all major sectors ending in the red. FMCG, financials, and banking emerged as the top losers, while weakness was visible across the broader market as well. Midcap and smallcap indices declined in the range of 1 per cent–2 per cent, reflecting widespread risk aversion and broad-based selling.  The sharp decline was triggered by renewed geopolitical tensions after the US President indicated that the US-Iran peace deal was "over", reigniting concerns over a prolonged conflict in the Middle East. The escalation pushed Brent crude prices sharply higher, reviving worries over inflation and its potential impact on India's macroeconomic outlook. Weak global markets, a spike in India VIX, and broad-based risk-off sentiment further accelerated the sell-off, while heavy selling in financial heavyweights added to the downside pressure.  Technically, the Nifty has slipped decisively below the key support zone of 24,000–24,150 and fallen beneath its major moving averages, weakening the near-term technical structure. The next crucial support is placed in the 23,650–23,800 zone, while any rebound is likely to face stiff resistance in the 24,150–24,300 region.  The sharp rise in volatility suggests that market swings may remain elevated in the near term. Given the prevailing uncertainty, we recommend maintaining a cautious stance, adopting a stock-specific approach with strict risk management, and waiting for greater clarity on geopolitical developments. 

Stocks Recommendations by Ajit Mishra of Religare Broking

  Ather Energy Limited | LTP: ₹1,200| Recommendation: Buy | Target: ₹1,340| Stop-loss: ₹1,125  Ather Energy continues to exhibit a strong bullish trend, trading comfortably above its key moving averages while maintaining a consistent pattern of higher highs and higher lows.  Rising volumes during upward moves indicate healthy institutional participation. Additionally, the stock has broken out of a flag formation, reinforcing the positive technical outlook.  Momentum indicators remain supportive of the ongoing uptrend, making the current levels favourable for accumulation. Investors may consider buying the stock within the recommended range.  Sun Pharmaceutical Industries Limited | LTP: ₹1,888.20| Recommendation: Buy | Target: ₹2,025| Stop-loss: ₹1,830  The pharmaceutical sector continues to witness sustained buying interest, with Sun Pharma participating in the sector-wide strength. After consolidating for nearly two years, the stock appears poised for a fresh breakout, having reclaimed its previous record high, which signals the resumption of its long-term uptrend.  It has also formed a fresh buying pivot around the current levels while continuing to trade firmly above its 20-day DEMA, indicating sustained strength. Considering the robust technical setup and favourable risk-reward profile, investors may consider accumulating the stock on a cash delivery basis.  ITC Limited | LTP: ₹281.50| Recommendation: Sell Futures | Target: ₹264| Stop-loss: ₹290  ITC continues to remain under pressure, underperforming the broader market within a well-established downtrend. Its recent consolidation lost momentum near the 20-day EMA, and the stock has subsequently broken below its narrow trading range on higher volumes, indicating renewed selling pressure.  The prevailing technical structure suggests further downside potential. Traders may consider initiating short positions in futures at the recommended levels while maintaining the prescribed stop-loss.  (Disclaimer: This article is by Ajit Mishra, SVP – Research, Religare Broking Ltd. Views expressed are his own. Analyst disclaimer.)