Chartist Talks: Milan Vaishnav Advocates Inclusion of These Two Large Caps in Portfolio Due to Structural Uptrend

In "Chartist Talks," Milan Vaishnav recommends incorporating two specific large-cap stocks into portfolios, citing a sustained structural uptrend. Join the discussion to explore these investment opportunities and understand their potential for long-term growth.

Milan Vaishnav is the CMT, MSTA, founder of Gemstone Equity Research & Advisory Services

"Investors should consider ABB India and Siemens as essential components of their portfolios. Both stocks are experiencing a sustained structural uptrend, indicating potential for continued growth," advised Milan Vaishnav, CMT, MSTA, and founder of Gemstone Equity Research & Advisory Services, during an interview with Moneycontrol.

Milan Vaishnav anticipates continued strength in the Nifty Pharma index in the upcoming months. However, he notes a potential loss of internal strength in the Nifty Auto index despite its recent robust performance. Vaishnav, with nearly two decades of experience in the capital markets, expects the Nifty Auto index to undergo a corrective retracement.

We're not entirely out of the woods yet. The current retracement marks the initial disruption of the primary trend. Until we surpass the high of 22,794, the market remains susceptible to profit-taking at higher levels.

Key considerations include the testing of the 20-week moving average (MA) at 22,098 and the presence of the 100-day moving average (DMA) at 22,000 on the daily chart. The 22,000-22,100 zone emerges as a critical support area for the Index; a breach below could signal further weakness.

However, there's a caveat regarding the upcoming general election outcome. Expect potentially extreme volatility, which might lead the market to disregard technical levels.

What is your trading strategy for the Nifty and Bank Nifty?

The trading strategy is straightforward: purchasing during downturns with anticipation of a technical rebound, provided Nifty maintains above 22,000 and Bank Nifty above 47,000. Breaching these levels could signal short opportunities. While ABB and Siemens exhibit structural uptrends, protecting at least 70% of profits during downside moves is essential. Investors should continually adjust stop-losses upwards in line with the uptrend, ensuring that if triggered, they retain at least 70% of peak profits.

Do you think the Nifty Pharma index is the star performer in the current financial year?

I anticipate the index to maintain its strength in the months ahead. Overall, I foresee a risk-off or cautious approach in the markets, potentially favoring traditionally defensive sectors such as Nifty Pharma, FMCG, and IT.

Will the Nifty Auto maintain its higher highs, higher lows formation this year?

‍The Nifty Auto has exhibited an upward trend, but there are indications of internal weakness, notably observed in the negative divergence between the price and the RSI (relative strength index). As a result, I anticipate a period of corrective retracement for this index, allowing it to pause and potentially retrace its recent gains.

Your top two bets for the rest of May?

Given my defensive stance, I'm inclined to seek stocks with improving relative strength and low beta. Therefore, I'm considering Lupin and Tata Consultancy Services (TCS) as potential options.

Lupin

Lupin has maintained a sideways trajectory for over three months, indicating potential for a breakout. It remains within the leading quadrant of the RRG (Relative Rotation Graphs), with the RS (relative strength) line surpassing the 50-period MA (moving average) and trending upward. The OBV (on-balance volume) hovering around its highs suggests strong volume participation and accumulation. I anticipate Lupin to test Rs 1,800 levels in the coming weeks.

TCS

TCS continues to maintain a structural uptrend, with recent attempts at a multi-month breakout on higher timeframe charts. Despite a retracement and full throwback, the stock is now poised to resume its upward trajectory. It exhibits robust relative strength against broader markets, with OBV marking a new high despite being away from its peak. This suggests significant accumulation supported by volumes. The potential for TCS to test the level of Rs 4,200 cannot be discounted in the coming weeks.

‍Source: moneycontrol