Moneycontrol
May 17, 2017 08:48 AM IST | Source: Moneycontrol.com

Derivative data suggests 9,600 on Nifty; 5 stocks which can give up to 14% upside

Call writes are continuously unwinding and shifting their short positions to higher strikes.

Derivative data suggests 9,600 on Nifty; 5 stocks which can give up to 14% upside

Shitij Gandhi

SMC Global Securities

The Nifty closed above 9,500 levels. What is next? Derivative data indicates a higher probability of Nifty heading towards 9,600 in the current series. The current upmove is supported by derivative data and position build-up.

The Nifty has been continuously adding open interest with every up move. On Tuesday, it had added nearly 6.28 lakhs in open interest. Option writers are aggressively selling puts on every rise.

Huge open interest addition was observed in at the money and in the money puts strikes (9500, 9600) which indicate upside momentum to continue in the expiry week.

Call writes are continuously unwinding and shifting their short positions to higher strikes. On Tuesday, FIIs data also indicates buying of index calls and writing in puts.

Here is a list of top five stocks which can give up to 14% upside in short term:

SRF: BUY | Target: Rs 2,050| Stop Loss: Rs 1,700 | Upside: 12%

After witnessing a hefty profit booking in February 2017 from Rs 1,750 levels, the stock took support at its 200-DEMA around Rs 1,550 levels and since then recovered from its lows making higher highs and higher lows on daily charts.

Currently, the stock has given a fresh break above its previous resistance level of Rs1800 and is expected to continue its bullish momentum in coming sessions as positive divergence in RSI along with short & long term moving averages are supporting the prices.

Traders can accumulate the stock in a range of Rs 1,825-1,850 for the upside target of Rs 2,050 with a stop loss below Rs 1,700.

PC Jeweller: BUY | Target: Rs 520 | Stop Loss: Rs 410| Upside: 14%

The stock has been seen consolidating in a narrow range of Rs 350-410 for more than 15-weeks before climbing high above its 50-DEMA on the weekly charts.

Since then, the stock has been soaring high well above its resistance of Rs 410 and trading in an upward channel. Also, the stock has formed symmetrical triangle formation on weekly charts and given break above its resistance of Rs 450 last week, which

signals bullish momentum to remain intact for coming sessions as well.

The stock has its multiple supports on the downside at Rs 422, 414 and 408 with 50, 100 and 200 DEMA respectively. Traders can accumulate the stock in a range of Rs 455-460 for the upside target of Rs 520 with a stop loss below Rs 410.

Dish TV: BUY| Target: Rs 113| Stop Loss: Rs 92| Upside: 14%

Prices witnessed sharp rally from Rs80 to 111 levels in short span of time and since then the stock has been trading lower amid profit booking at higher levels. On daily charts, the stock has taken support around its 200-DEMA which is also 61.8% retracement level of the previous rally.

In the previous session, once again prices have shown recovery and manage to close above its important moving averages. On broader picture, the stock has also formed a cup and handle formation on weekly charts which considered as bullish in nature and indicates more upside in prices in coming sessions.

Traders can accumulate the stock in a range of Rs99-101 for the upside target of Rs113 with a stop loss below Rs92.

EIL: BUY | Target: Rs 195| Stop Loss: Rs 160 | Upside: 13%

EIL gained traction from Rs145 levels to 174 levels last month. However, since then the stock went into consolidation and traded in the range of Rs162-172 levels.

In Tuesday’s session, buying momentum was witnessed as the stock rose above its falling trend line with the rise in volumes.

On the daily charts, the stock has also formed a bullish flag formation which is categorized as continuation patterns. Traders can accumulate the stock in a range of Rs172-174 for the upside target of Rs195 with a stop loss below Rs160.

JSW Steel: BUY | Target: Rs 225 | Stop Loss: Rs 185 | Upside 12%

The stock has been trading relatively high and making higher highs and higher lows on the daily charts. Also, prices are well trading above its short and long term moving averages with multiple supports at lower levels.

On the daily charts, the stock has formed “W” pattern and is on the verge of giving breakout above its resistance level of Rs205. With positive signals in oscillators along with higher volumes suggests that stock has much more potential in the coming session to rise towards the north.

Traders can accumulate the stock in a range of Rs200-205 for the upside target of Rs225 and a stop loss below Rs185.

Disclaimer: The author is Senior Research Analyst, SMC Global Securities Ltd. The views and investment tips expressed by investment experts on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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