The global markets are speculating that central banks have reached their peak in rate hikes and will not raise rates further. However, inflation still remains above the targets set by central banks in several countries, indicating that the battle against inflation is far from over.
The European Central Bank (ECB) recently raised its key interest rate to a record high of 4 percent. Despite this, the ECB signaled that this could be the last rate hike it implements. The eurozone economy is struggling, and the central bank recognizes the need to be cautious. This rate increase marks the 10th in a 14-month-long fight against inflation for the ECB.
Analysts remain positive about the medium to long-term prospects of the domestic market. However, they expect some volatility in the short term. Therefore, they advise investors to adopt a stock-specific approach at present.
Analysts have recommended nine stocks that they believe are sound choices based on technical parameters.
According to Gaurav Bissa, VP of InCred Equities, Wipro, a large-cap IT stock, is a good buy. The stock has recently broken out of a rounding bottom pattern and is trading above major moving averages on the daily charts. Bissa predicts that the stock could reach ₹470.
In the PSU banking space, UCO Bank is considered strong. It has witnessed a bullish flag breakout on the weekly charts, indicating a continuation of the uptrend. The stock has also experienced a bullish MACD crossover, further supporting the potential for an uptrend.
BCL Industries is another recommended stock. It has shown a consistent uptrend with higher highs and higher lows formation on the weekly charts. The stock has also broken out of a bullish cup and handle pattern, suggesting a continuation of the uptrend.
REC, a stock that recently retraced from its peak, is expected to see another upside move. The stock has found support near ₹240 and the RSI has cooled off from being overbought. Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, recommends buying and accumulating REC with a target price of ₹280.
Kotak Mahindra Bank is also expected to see a rise in its stock price. The stock has held a strong base near the support of ₹1,750 and experienced a pullback from a consolidation range. The RSI is rising, indicating strength and a potential for further upside.
Overall, while central banks may pause rate hikes, inflation remains a concern. Investors should consider the recommended stocks for potential gains in the short to medium term.
– Reuters (quotes)
– Mint (recommendations)