Markets have been simply become untradable in the recent times, with volatility reaching newer highers. We saw the markets rally significantly on the news of 120 Bn Euro for Euro growth plan. When we got a 500 bn LTRO in Jan 2012, we saw markets rally all the way form 4600-5500, however this time i see a good 250 point rally in the markets. This gives us a good opportunity to sell these stocks as the Nifty may rally to 5350-5400 levels in the Next few days.
Here are my top picks to sell in the recent rally.
1. BoB: Fundamentally the stock was a blind buy around 640 levels however the kind of rally the stock has seen , shows the strength in the counter, however i see a risk with the bank as asset quality concerns still prevail. MD Mallya who has taken the bank to new heights is set to retire in october 2012, which will be negative for the stock.
Technically the stock faces a spree of resistances around 750, the 200 DMA , and a strong resistance @ 745 will be hard to take out. if the stock is unable to sustain the breakout (which is highly probable) we can expect lower levels.
2. Hindalco
Hindalco is just an example from the commodity stock segment, with the chinese economy slowing the way it is, it will take a while for these stocks to rally significantly.The current rally can be used as an excellent opportunity to exit the stock. Book partial profit @ 126 and 133 around the 200 DMA. This in an excellent stock to own for a longer term and should be bought on dips.
