Moneycontrol
Jun 15, 2017 08:50 AM IST | Source: Moneycontrol.com

Buying opportunity if Nifty dips to 9,500; 4 stocks which could give up to 26% return

We expect the index to consolidate with a positive bias and oscillate between the broad range of 9,500 and 9,750 in the coming sessions while stock specific activity will remain in focus.

Buying opportunity if Nifty dips to 9,500; 4 stocks which could give up to 26% return

Dharmesh Shah

ICICI Direct.com Research

The Nifty continues to witness narrow range bound consolidation over the last seven trading sessions since hitting a life-time high of 9,709.

Structurally, this is seen as a healthy corrective phase as the index is gradually working off overbought conditions developed on the weekly stochastic oscillator after the five-week rally.

The entire up move since February 2017 has occurred in a narrow rising channel. Within this channel, intermediate corrective phases have not lasted more than six to eight sessions and price wise not measured more than 200 points.

In the present scenario with the 129 point cool-off from a recent peak of 9,709 already in place in last seven sessions, we believe the index will conclude current breather in next few sessions.

Time wise, the index has already spent seven sessions under consolidation while price wise it has not even retraced 38.2% of the preceding nine sessions up move (9,341 to 9,709).

The shallow price wise correction and extended time-wise consolidation highlights the overall robust price structure.

We expect the index to consolidate with a positive bias and oscillate between the broad range of 9,500 and 9,750 in the coming sessions while stock specific activity will remain in focus.

We believe the current consolidation will make the market healthier and create fresh buying opportunities. The immediate support base for the index is placed at 9500 region as it is the confluence of lower band of rising channel and 50 percent retracement of the last rising segment.

Here is a list of top five ideas based on technical for a period of 3-6 months:

Info Edge: BUY| Target Rs1,210| Stop Loss Rs895| Upside 18%| Time Frame 6 months

The share price has currently emerged out of a major consolidation phase of nearly three years thereby triggering a structural turnaround and provides a good investment opportunity from a medium term horizon.

The stock has been oscillating sideways in the broad range of Rs1015 to Rs700 levels over the last 30 months. The key observations during this corrective phase highlight the robust price structure.

Price wise, the stock retraced just 38.2% of the major bull-run while time wise it has spent 30 months under consolidation, which is double the amount of time taken for the preceding rally (15 months).

Shallow price wise correction and elongated time wise consolidation form the cornerstone of a healthy corrective phase within the larger degree uptrend.

We believe the stock has concluded a major consolidation phase and is set to embark upon its next directional up move. We expect the stock to head towards Rs1,210 over the medium term as it is the 123.6% Fibonacci price extension of the last up move (Rs688 to Rs1025 =337 points) added to recent higher bottom of Rs796 projects upsides towards Rs1210

PVR: BUY| Target Rs1745| Stop Loss Rs1410| Upside 15%| Time Frame 6 months

The share price of PVR, a leading multiplex player, remains in a well-established uptrend, persistently forming higher highs and higher lows on the long-term price charts.

Within this secular bull trend, the stock has undergone periodic phases of secondary corrections, which have provided fresh entry opportunities.

After a decent correction of over 13% from the April 2017 high of Rs1655, the stock has rebounded from a major value area of Rs1370 being the confluence of 50% retracement of the previous major up move and the lower band of rising encompassing entire up move since December 2016.

The stock formed a hammer like pattern on weekly scale highlighting strong demand emerging precisely near the earmarked value area of Rs1370 during previous weeks trade.

Follow through strength above hammer patterns high signals resumption of upward momentum and conclusion of the secondary corrective phase thereby providing fresh entry opportunity.

Aditya Birla Fashion & Retail: BUY| Target Rs231| Stop Loss Rs159| Upside 26%| Time Frame 6 months

After witnessing a decent price/time wise correction over the past 18 months, the stock looks on the verge of resuming its next up leg, thereby offering a fresh entry opportunity for medium term investors.

The corrective decline since the January 2016 peak of Rs263 was anchored around the key value area of Rs125 in June 2016. Since then the share price entered a basing pattern as the price oscillated in a broad range of Rs180-125 over the past 12 months.

In the current month, the share price is seen resolving higher out of the 12-month basing pattern signalling maturity of corrective phase

The monthly MACD indicator has generated a crossover above its nine-period average and seen diverging from the average indicating strength in the price breakout and augurs well for the continuance of upward momentum going forward.

We expect the stock to continue its uptrend and head towards Rs235 over the medium term as it is the measuring implication of the trading range breakout (180-125=55 points) as projected from the breakout level of Rs180.

Godrej Industries: BUY: Target Rs705| Stop Loss Rs610| Upside 9%| Time Frame 3 months

The stock remains in a secular uptrend as it continues to conquer uncharted territories in a rising peaks and troughs manner on long term price charts indicating persistent demand at elevated levels.

The stock has registered a resolute breakout above the upper band of long term rising channel encompassing the entire price action since 2009. The breakout past an already up-trending channel highlights strong bullish momentum. The recent breakout was accompanied by strong volumes which highlight larger participation in the direction of the primary trend.

Disclaimer: The author is Head Technical, AVP at ICICI Direct.com Research. The views and investment tips expressed by investment experts on Moneycontrol.com are their 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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