2 Good Stocks To Invest In: Market Trading Guide By VLA Ambala On Monday, 2nd September

On 30 August 2024, the Indian stock market recorded a new all-time high of 25,268.35. Both the NIFTY 50 and Sensex indices set record highs during the August monthly series. Broader sentiments and opportunities fuel markets, and one close look at the current conditions could help better understand this dynamic. Despite the high valuations and odds, August closed on a positive note as both Nifty and Sensex displayed lower price rejection, ending the month with a gain of over 1%.

"Nifty is trading at a 23x multiple of its actual value, as suggested by its current PE ratio. However, several heavyweight stocks, such as HDFC and Reliance, are still trading 9% and 6% below their record highs, respectively. In this situation, it is common to wonder-what fueled this rally? Core sectors such as IT, Pharma, FMCG, Consumer Goods, and Metals have supported the prevailing market sentiment. In addition, factors including the depreciation of the Indian rupee against the USD, the surge in the price of food and related items, global concerns over Mpox, and favorable government initiatives to support R&D in the pharmaceutical sector are contributing to this surge," V.L.A. Ambala, a Research Analyst (SEBI Registered), Co-founder - Stock Market Today (SMT), said.

An Overview of the Stock Market As Per VLA Ambala

Besides these, domestic inflows and retail participation have gained momentum in the market. As a result, mutual fund houses are displaying high liquidity. Meanwhile, more direct market participants are learning how to trade and invest in the stock market. On the global scale, India is in a safer position as the market displays growth potential and offers ample opportunities to navigate the highs. Collectively, these factors are creating a favorable growth environment for investments, especially those with a 3-5-year horizon.

On the technical chart front, both NIFTY and Sensex tested their 50-day EMA on August 5, offering a dip-buying opportunity to mid- to short-term investors. This drove the index to surge 5% to reach a fresh record high of 25,174.55. However, I recommend caution as the benchmark index NIFTY is currently trading in an overbought zone as per its RSI readings of 67 on the daily, 74 on the weekly, and 81 on the monthly timeframes. Historically, the NIFTY 50 index has crossed the 80 RSI mark only five times in the monthly frame, and each time, the price declined within 3-6 months. On the other hand, the trade deficit stands at 17.20%.

Currently, the broader market is flooded with heavy liquidity thanks to domestic inflows across various channels. A handful of heavy stocks are trading below their record highs against benchmark indices. Notably, retail participation is at a record high and is yet to unleash its full potential.

Meanwhile, the global economies are struggling with the effects of cross-border tensions and high unemployment rates. For instance, Reliance Industries recently laid off 45,000 employees, underscoring the impact on employment across the globe. This uncertain environment is driving individuals to explore stock market opportunities through direct investing, mutual fund SIPs, ULIPs, and other avenues, increasing market liquidity. However, they must be cautious and invest only in the cash market with funds they would not need for at least the next 2-3 years because the market is bound to test the patience of new entrants. They must also note that swing and day tradings tend to vary, so keeping an eye on the support and resistance levels and reviewing performance every month could help make more informed decisions.

Market Overview for 2 September 2024, Monday

"For the Nifty index, the key support levels for the next trading session will be at 25170, 25080, or 25000 whereas resistance will likely be between 25300 and 25410. On the other hand, the Bank Nifty Index could find key support between levels 51180 and 50950, and witness 51550 and 51800, acting as their major resistance points," VLA Ambala predicted.

Stocks to buy on 2 September 2024, Monday

VLA Ambala has recommended 2 stocks to buy or sell on Monday, 2nd September based on technical picks.

DATAMATICS

Buy: Rs. 600-620
Target: Rs. 690/740/800/850/900/950/1000
Holding Period: 1-6 Months
Stop Loss: Rs. 510

Prestige

Buy: Rs. 1740-1800
Target: Rs. 1920/1970/2100/2160/2250
Holding Period: 1-6 months
Stop Loss: Rs. 1590

Note: V.L.A. Ambala emphasizes that these recommendations are based on price movement, past behavior, and technical analysis.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.