What are the Best Stocks to Buy for 2022 – Technical Analysis & Update

We are about to end the year 2021 and what a fantastic year it has been for stock market investors.

While Nifty has delivered returns of about 22% in this calendar year, Nifty midcap index has delivered returns of over 42 percent while the small cap index has given returns over 53 percent.

Now, this has become history…and what we are looking ahead is the year 2022…The question is will the equity market continue to give such returns and oblige the investors? And  if yes, then which are the stocks to buy for 2022.

Nifty Outlook:

In last couple of months, our markets have corrected from the highs and Nifty has given correction of more than 10 percent. The portfolio values too have came off the highs for many investors in last two months.

In our view, the bull market is not over yet and this downmove just seem to be a corrective phase within an uptrend.

Although the daily chart still shows a ‘Lower Top Lower Bottom’ Structure, the bears seem to have lost the grip post the recovery from recent swing lows of 16410.

Nifty is hovering near the 17000 mark and the 17300-17400 is the key resistance range. We may see a small dip from this range in next few days, but we would advice to look for buying opportunities in any such dips.

And once Nifty manages to surpass this hurdle of 17300-17400, then the bulls will be back on driver’s seat to led the markets higher.
 

Bank Nifty View

Even if we look at Bank Nifty, this index is about to complete its 5 wave decline and hence is in the last leg of the corrective phase.

We may be at the end of a corrective phase or have completed the correction and hence, we expect limited downside here too.

So this is a good opportunity for investors to look for buying opportunities and consider stocks from this sector for next year as we expect the bull market to continue.
 

Best Stocks to Buy in 2022

There were many stocks which have given multibagger returns to investors in the year 2022. Although some stocks would continue to deliver higher returns, we focused on stocks that have higher probability of good returns in 2022. These are our Top picks for next year.

Here are some of the best stocks which look promising on charts and can deliver good returns in coming year - 

1. ICICI Bank

ICICI Bank has been one of the outperformers within the banking space in 2021 and it has shown a relative strength in this space. As we expect the banking index complete its corrective phase, this stock could be the leader in the pullback move in Bank Nifty. 

The stock is hovering around its 89 EMA support on daily chart and if we look at its RSI on the weekly chart, it has traded above the 50 mark since October 2020 and is now trading around that support. Thus, making this stock as one of best stocks for 2022.

So we expect this index heavyweight to continue its outperformance and hence, one can look this as a stock for 2022 and buy ICICI Bank share around current levels of 740-730. The potential target for this stock is seen around Rs. 810 and one can place a stop loss below Rs. 698 on their positions.

2. Hero MotoCorp

The Auto space has not done relative well in 2021 and this stock, which is one of India’s first motorcycle manufacturers has underperformed with negative returns in this year.

However, when we digged into into long term charts, we saw that the stock is currently trading at 61.8% retracement support of the previous uptrend which is placed around Rs. 2300. Also the 200 EMA on the monthly chart is placed around Rs. 2200 and the RSI Smoothened oscillator on the daily chart is showing a positive divergence. Hence, it looks worth bottom fishing in this stock and hence, one can look to buy this stock on declines in the range of 2350-2300 with a stoploss placed below Rs. 2150. We expect a pullback move towards its 89 EMA on the daily chart which is placed around Rs. 2650 first and above that, 2750 will be targets to watch out for. Thus, one can take a contra trade in Hero MotoCorp as the above structure is making this stock as one of best stocks for 2022.
 

3. CCL Products

Post an impulsive up move, CCL Products stock entered a corrective phase during the end of July 2021 and since then; prices have been consolidating within a range. The volumes during the corrective phase were lower as compared to those seen during the uptrend.

Post some time-wise correction around its support on the daily chart, the stock prices have given a breakout today from the resistance with good volumes. Thus, these are early signs of a resumption of the broader uptrend in the stock and hence, one should consider this as a good stock to buy for 2022.

Traders can look to trade with a positive bias and buy CCL Products share in the range of Rs.425-420 for a potential target around Rs.470-480. One can place a stop loss below Rs. 398 on long positions.

4. Larsen & Toubro 

The capital goods sector has off late witnessed a good buying momentum and L&T has shown a steady upmove in the year 2021.

In recent correction, prices took support at its daily 89 EMA and have now resumed the momentum. The RSI oscillator on weekly and monthly charts are positively placed and indicating a probability of positive momentum going ahead, and thus adding this in to our list of best stocks to buy for 2022.

Hence, we expect the stock do steadily move higher and thus one can look to buy L&T Share in the range of 1870 - 1850. Traders are advised to keep a stop loss below 1735 and expect a potential target of Rs.2200 in next few months.

Report Prepared by -

Ruchit Jain, Lead Research Analyst, 5paisa

Disclaimer:The investments discussed or recommended may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting such independent advisors as may be necessary.