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Jan 10, 2018 08:55 AM IST | Source: Moneycontrol.com

Short covering likely to push index towards 10,750; 5 stocks which can give up to 19% return

On the technical front, 10,550-10,500 spot levels is strong support zone for Nifty and current trend is likely to continue towards 10,700-10,750.

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Shitij Gandhi

SMC Global Securities

At current levels still, there is a lot of outstanding short position held in Nifty and Index calls and we can expect another round of short covering move going forward.

As per the current derivative data, Nifty can move towards 10,750-mark as the market undertone remains bullish with the support of consistent long buildup and short coverings.

The derivative data indicates the bullish scenario is expected to continue with Nifty having multiple strong supports at lower levels around 10,550 and 10,500 spot.

Currently, Nifty is moving up, with a decent addition in the open interest (OI) which indicates strength in the current trend. Option writers were active in the recent rally as we have seen put writing in 10,400, 10,500 & 10,600 strikes along with the unwinding in calls.

We have been continuously seeing open interest addition post expiry which indicates long buildup. Moving forward, we expect a fresh breakout in the Nifty Bank which can lead the market and let Nifty to make new highs.

On the technical front, 10,550-10,500 spot levels is strong support zone for Nifty and current trend is likely to continue towards 10,700-10,750.

Here is a list of top 5 stocks which can give up to 19% return in the short term:

Bharat Gears Limited: BUY| Target Rs247| Stop Loss Rs197| Return 14%

The stock has been trading in a rising channel band on the daily and the weekly charts. However, from the last three weeks, the stock has been seen consolidating in a narrow range of 200-215. The price movement is similar to a rectangle formation on the charts.

In Tuesday’s session, fresh breakout and the stock price rose above the pattern formation along with higher volumes. The formation is generally traded as continuation pattern of the previous trend.

Traders can accumulate the stock in the range of 215-220 for the target of 247 with a stop loss below 197.

Persistent Systems Limited: BUY| Target Rs837| Stop Loss Rs685| Return 13%

The stock has given a price volume breakout above Rs675 levels in the recent past and also tested Rs720 levels in the short span of time.

However, since then, the stock is trading in the range of Rs695-720 and formed a bullish flag pattern on the daily charts.

In Tuesday’s session, we saw a fresh breakout above the pattern formation along with hefty volumes which suggest next up move in prices moving forward.

Traders can accumulate the stock in a range of 740-745 for the upside target of 837 with a stop loss below 685.

Srikalahasthi Pipes Limited: BUY| Target Rs490| Stop Loss Rs390| Return 15%

In the recent past, the stock witnessed profit booking at higher levels and fell towards its 200 days exponential moving average on daily charts.

However, since then the V shape recovery has seen in prices as once again the stock has risen above its short-term moving averages.

Additionally, on the daily charts, it has formed an inverted head and shoulder formation and also given breakout above the neckline of the pattern. Traders can accumulate the stock in a range of 425-430 for the target of 490 with a stop loss below 390.

Garden Silk Mills Limited: BUY| Target Rs59.50| Stop loss Rs45| Return 19%

The stock has given consolidation breakout above 40 levels in recent past and tested 49.50 levels following the bullish momentum.

At the current juncture stock has formed Bullish flag formation on daily charts and has also given breakout above the recent resistance of 49 along with breakout above the pattern formation along with marginally higher volumes.

Traders can accumulate the stock in a range of 50-51 for the target of 59.50 with a stop loss below Rs45.

Kanoria Chemicals & Industries Limited: BUY| Target Rs122| Stop Loss Rs98| Return 14%

On the daily and weekly interval, the stock has formed a symmetrical triangle formation. Additionally, a fresh breakout above the pattern formation has also been witnessed in Tuesday’s session along with hefty volumes.

Moreover, positive divergence in secondary indicators like stochastic and RSI also supporting the next up move in prices moving forward.

Traders can accumulate the stock in a range of Rs107-109 for the target of Rs122 with a stop loss below Rs98.

Disclaimer: The author is Senior Research Analyst, SMC Global Securities Ltd. 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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