Mustafa Nadeem
The Indian equity market continued to trade rangebound for the last couple of days. Decoupling of breadth and profit booking in index heavyweights are major concerns, while the April F&O expiry and downturn in volatility are factors to be considered.
The overall momentum though looks in favour of the bulls since the index is trading above its short-term moving averages. Immediate support are placed at 10,400-10,500 levels, which are well protected by moving averages like the 20 and 50 Days.
Another major point to look at is the reduction in breadth from 9,950 to 10,400. The overall major contributor like metals, banking, autos and financials are now seeing some profit booking at higher levels.
Revival in FMCG, IT, pharma and realty are playing the lead role. Above expected numbers posted by Tata Consultancy Services also bolstered momentum with IT stocks coming to party and adding 10-15 percent in the last couple of days
A decline in volatility has further aided the momentum for bulls which shows the range to be intact with an upward bias since we have seen writing in strikes at 10,500-10,400 along with 10,700-10,800.
The upside can now be further seen only if there is some support from the Bank Nifty. We need to see if it sustains the 24,850-25,000 mark then an upward move to 25,500-25,600 cannot be ruled out.
Here is a list of top three stocks which could give up to 7% return:
Reliance Industries: BUY | Target: Rs 1040 | Stop loss: Rs 930 | Return: 7%
The stock is coming out of a long consolidation on the back of higher volume while the momentum indicators also show a positive divergence in the stock suggesting that the upside may continue with a possible target of Rs 1040.
If the stocks manage to stay above Rs 1040 then the rally may extend to Rs 1090. Traders should place a stop loss below Rs 930 for all long positions.
(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)
Bajaj Auto: BUY | Target: Rs 3080| Stop loss: Rs 2810 | Return: 6%
The stock witnessed a breakout from a bullish continuation candlestick pattern. A double bottom placed at Rs 2750 - 2800 now looks to be a short-term bottom for the stock while a bounce in price is expected to take the stock higher towards Rs 3080 to 3100 with a stop loss below Rs 2810.
Mahindra & Mahindra: BUY | Target: Rs 910| Stop loss: Rs 800 | Return: 6%
The stock is continuing an upward momentum with higher tops and higher bottoms and a recent breakout from the previous peak with high volume suggesting further upside.
The stocks broke out from a bullish candlestick pattern which suggests that the momentum may continue and could see higher levels towards Rs 900 - 910.
Disclaimer: The author is CEO, Epic Research. The views and investment tips expressed by investment experts on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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