Moneycontrol
Nov 10, 2017 08:39 AM IST | Source: Moneycontrol.com

Selling pressure could intensify if Nifty slips below 10250; 3 stocks to buy for coming week

Forming a third consecutive lower high and lower low pattern, Nifty settled the session in positive territory. It also implies that selling pressure could intensify only if Nifty fails to sustain above 10,250.

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Pritesh Mehta

IIFL Private Wealth

The market strength is always judged on corrections. Continuing the recent tendency of opening higher and letting go sharply in the latter half, Nifty made a low of 10,267.

However, BankNifty had other ideas in mind, providing respite to benchmark index after staging an upmove of 100 points, and regaining control above the recent breakout level of 25,200. As a result, Nifty managed a close above 10,300 level.

Point of confluence around 10,285 came into play in Thursday’s trade and caused a pause following two days of decline.

Support of 180 degrees move from the peak of 10,490 and the second line of defence as per the gann rule of 8 placed around 10,290 (from the base of the rally that began on 28th September) provided some respite.

Moreover, during the intraday decline, Nifty took support near its 21-days EMA which has been acting as a savior point since early October.

Forming a third consecutive lower high and lower low pattern, Nifty settled the session in positive territory. It also implies that selling pressure could intensify only if Nifty fails to sustain above 10,250.

Here is a list of three stocks which could give up to 7% return in the short term:

Asian Paints: BUY| Target Rs1275| Stop Loss Rs1160| Return 7%

The point of polarity around Rs1,120 came to the rescue of Asian Paints. The stock had been on a downward curve after making a peak of Rs1,234 in last week of October 2017, after it failed to sustain above the gann number of 1225.

However, the corrective move came to an end after the stock yet again found respite around the horizontal line placed near the point of polarity. Since July 2017, on multiple occasions the stock has bounced back, paying credence to the important support line.

Up trending stocks tend to find support at declines and also tend to recover sharply from such corrective movement.

Based on above rationale, we expect the stock to build on last two days week’s recovery. Traders can buy Asian Paints above Rs1,190 with a stop loss of Rs1,160 and a target of Rs1,275.

Indiabulls Housing Finance: BUY| Target Rs1310| Stop Loss Rs1200| Return 6%

Multiple tops are placed around Rs1,370 which led to a reversal as the stock made a low of Rs1,170 before forming a Hammer pattern on the candlestick chart.

It is a trend reversal pattern and is accompanied by a positive divergence in the RSI oscillator from the oversold terrain. A Hammer pattern on the daily chart, suggests that recent selling pressure has exhausted and the stock will resume a new trend.

With the recovery in Thursday’s trade, the stock yet again regained control above its 21-weekly moving average. As long this support is intact, traders should use declines for buying opportunities.

The confluence of gann numbers between the range of 1210-1225 has contributed to recent reversal. Based on above observations, we recommend a buy on Indiabulls Housing Finance above Rs1,235 with a stop loss of Rs1,200 and a target of Rs1,310.

Britannia Industries: BUY| Target Rs4980| Stop Loss Rs4710| Return 5%

It is currently going through a phase of consolidation at the top of its rally. It is showing characteristics of a stock which is in a strong uptrend. It is moving higher along with the support of its 13-WEMA since January 2017, wherein every pullback towards this critical moving average has resulted in buying opportunity.

Since the last three weeks, the sideways consolidation at the top of its trend can be termed as bullish consolidation. The outcome of such sideways movement is dealt positively during an uptrend.

Moreover, it continues to trade above the gann number of 441(0). A move above Rs4,850 would result in a shift in the orbit on the upside and would eventually confirm a breakout from the bullish consolidation pattern.

Based on above parameters, we recommend traders to buy on Britannia Industries between Rs4,750-4,770 with a stop loss of Rs4,710 and a target of Rs4,980.

Disclaimer: The author is Head of Technical Research at IIFL Private Wealth. 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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