Analyst picks 2 stocks to buy, 1 to sell as Nifty enters correction zone

Jatin Gedia of Teji Mandi reckons that the Nifty, Bank Nifty have slipped back into the correction zone; he recommends buy on Oil India and Exide Industries.

Nifty, Bank Nifty outlook today

  The Nifty opened gap down and witnessed sharp selling pressure during the second half of the day. Nifty closed down 517 points at 23,882. It slipped back into the previous range of 23,800 - 24,200.  A breach of 23,800 could lead to a decline toward 23,650, which is the lower end of the gap area formed on 15th June and the 61.8 per cent Fibonacci retracement level of the rally from 23,000 - 24,500.  Momentum indicator MACD has triggered a negative crossover which is a sell signal. Considering the price action and the momentum setup we expect the Nifty to trade with a negative bias over the next few trading sessions.  Bank Nifty has also entered a correction phase after the sharp rally from 53,000 to 58,700. The 50 per cent Fibonacci retracement level of the entire rally is placed at 55,870.  Momentum indicator MACD had a negative crossover and today the price confirmed this bearishness. Thus, going ahead we expect the Bank Nifty to also trade with a negative bias. 

Stocks to buy by Jatin Gedia of Teji Mandi

  Buy EXIDE INDS - CMP - ₹421.35; SL ₹412; TGT ₹443  Exide Industries has broken out of a Bullish flag pattern on the daily charts. MACD has a positive crossover which is a buy signal.  Buy OIL INDIA - CMP ₹430.35; SL ₹415; TGT ₹455  OIL INDIA has broken out of an Inverted Head & Shoulders pattern on the daily charts. RSI formed a positive divergence indicating exhaustion of selling pressure.  SELL - HINDPETRO - CMP ₹386.85 SL ₹394; TGT ₹371  HINDPETRO has broken down from a Bearish flag pattern on the daily charts suggesting resumption of the downtrend. MACD has a negative crossover which is a sell signal.  (Disclaimer: This article is by Jatin Gedia, VP - Technical Research, Teji Mandi Investment Technologies Ltd. Views expressed are his own.)