Stocks to buy for the short term: Extending the losses into the second consecutive week, the Indian stock market benchmark, Nifty 50, dropped nearly a per cent for the week ended January 17. Unimpressive , foreign capital outflow, caution ahead of Budget 2025, and uncertainty surrounding tariff policies weighed on market sentiment.
Trump will be back at the White House on Monday, January 20.
Experts expect the market to remain volatile in the short term due to domestic as well as global factors.
“The market is expected to remain cautious in the short term due to moderate Q3 expectations, while persistent FII outflows could add to higher volatility. The incoming US president’s policies and comments will be keenly watched with a focus on tariffs. Higher inflation in Japan or tighter policy from BoJ will weigh on market sentiments,” said Vinod Nair, the head of research at Geojit Financial Services.
As the market sentiment remains fragile, experts recommend caution in stock selection. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, recommends buying shares of IRCTC, Chennai Petroleum and Rico Auto for the next two to three weeks. Here’s what the expert says:
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 per cent rally, signalling a potential trend reversal. Notably, this pattern emerged near a key historical support level from September 2023, reinforcing its significance. Additionally, the RSI on the daily chart has shown a bullish divergence, indicating a shift in momentum and strengthening the bullish case.
“This confluence of factors-bullish price action, support at a critical level, and RSI divergence-suggests a potential upside move. Based on this technical setup, we recommend going long in the price range of ₹775-780. A stop-loss is placed at ₹740 on a daily closing basis to limit risk, while the target for this trade is set at ₹860, offering a favourable risk-reward ratio,” said Patel.
Chennai Petroleum Corporation | Previous close: ₹590.95 | Buying range: ₹585-595 | Target price: ₹650 | Stop loss: ₹560
On December 19, 2024, Chennai Petroleum formed a massive bullish engulfing pattern, followed by an impressive 15 per cent rally, signalling strong buying interest. Recently, the stock pulled back near the low of the bullish engulfing candle but consistently closed above it, indicating that the support is intact and hinting at a potential reversal. This price action reflects the buyers’ willingness to defend critical levels.
Adding to the bullish outlook, the RSI (Relative Strength Index) has shown a bullish divergence, further supporting the possibility of upward momentum.
“Based on this confluence of technical factors, a long position is advised in the price range of ₹585-595. The trade has a stop-loss at ₹560 on a daily closing basis, protecting against downside risks. The target price for this setup is set at ₹650, offering a favourable risk-reward ratio for traders aiming to capitalize on this potential reversal,” said Patel.
Rico Auto Industries | Previous close: ₹91.23 | Buying range: ₹90-92 | Target price: ₹103 | Stop loss: ₹85
Rico Auto has recently formed a bullish triple bottom pattern accompanied by a bullish divergence, signalling a potential trend reversal. Additionally, in the current month, the stock took support at the monthly CPR (Central Pivot Range), a crucial zone often indicating strong buying interest, and reversed upward. In the previous trading session, it surged by 4.66 per cent, further confirming bullish momentum.
“Based on these factors, a long position is recommended in the price range of ₹90-92, with a stop-loss at ₹85 to limit downside risk. The target price for this trade is set at ₹103, offering an attractive risk-reward ratio,” said Patel.
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