Since it is expiry week, the market is likely to remain range bound between 10250 and 10500 levels with positive bias; and may see breakout towards later part of the week, said Ashish Chaturmohta, Head of Technicals and Derivatives at Sanctum Wealth Management
By Ashish Chaturmohta
Equity market opened on a negative note on Monday after S&P maintained India’s sovereign rating and weak Asian markets cues also weighed on sentiment.
Markets shrugged this off in the second half of the session. The Nifty recovered to close in the positive for the eighth consecutive session in a row though it was marginally higher.
The Nifty50 ended the session at 10400 levels up by 10 points. The market breadth was in favour of the bulls with 1021 advances against 727 declines on NSE.
The mid and small cap stock did well in the session as respective indices notched up more than half a percent gain.
The Nifty has been slowly inching higher for the last one week after Moody’s rating upgrade. The recent gap zone of 10260-10230 is the support area for the index.
Holding above 10230 levels, the market can rally towards 10540 and then 10650 levels on the upside. Since it is expiry week, the market is likely to remain range bound between 10250 and 10500 levels with positive bias; and may see breakout towards later part of the week.
While the stock specific action is likely to continue with mid and small cap indices giving a fresh breakout on Monday. India VIX is also coming off in past few sessions which supportive of the market, but any spike in volatility can lead to pressure in the market.
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The stock has been consolidating broadly in a range of Rs 120 and Rs 80 levels for the last one year. Post its second-quarter results price has shown strong momentum on the back of high volume for the last couple of weeks, indicating buying participation in the stock.
On long-term monthly chart as well, the price is forming a double bottom pattern indicating a long-term base formation in the stock which often indicates strong uptrend.
On the monthly chart, the price is showing Bollinger band breakout on the upside, and with the expansion of bands indicating price is likely to continue in the direction of the uptrend.
MACD on the weekly chart has turned up from the neutral level of zero after a positive crossover, suggesting the stock is seeing the fresh start of up move. Thus, the stock is a buy at current level of Rs 117 and on dips to Rs 114 for a target of Rs 133 level with stop loss of Rs 111.
Tata Elxsi: Buy | CMP Rs 972| Stop loss: Rs 935| Target: Rs 1060-1080| Return 11%
The stock is in a steady uptrend forming higher top formations on the daily chart as it moves along 20-day moving average. The price had seen a temporary pause in trend as it faced resistance at Rs 920 levels.
Now the price has crossed the important 61.8 percent Fibonacci retracement level of the fall from 1202 to low of 510 levels, clearing critical hurdle level.
ADX line which is a measure of trend strength has moved above neutral level of 20 on the weekly chart, suggesting the trend is likely to pick up strength going forward. The stock is a buy at current level of Rs 972 and on dips to Rs 955 for a target of Rs 1060-1080 levels with stop loss of Rs 935.
M&M Financial Services: Buy | CMP Rs 443| Stop loss: Rs 425 | Target: Rs 495-505| Return 25%
The stock is in uptrend forming higher top higher bottom formation on its daily chart. For last three months, the price has been consolidating above its previous all-time high of 405 levels before its next move.
On the weekly chart, the price has been taking support at 20 moving average and recent bounce back has been from this support level. Sustaining at current levels price is likely to see a fresh breakout on the upside towards new highs.
The stock is a buy at current level of Rs 443 and on dips to Rs 435 for target of Rs 495-505 levels with stop loss of Rs 425.
Zee Entertainment: Buy | CMP Rs 575| Stop loss: Rs 555 | Target Rs 640| Return 11%
Media sector as a whole is doing well with Nifty Media trading at an all-time high after yesterday’s breakout and individual stock from the sector are also seeing fresh breakouts. Zee Entertainment showing lot of potential after the consolidation it has seen.
The stock had been trading in the range of Rs 560 and Rs 480 levels for last seven months. Last week it gave breakout from this range with price momentum backed by volumes. Price has managed to sustain above breakout level and follow through action was seen in yesterday’s session.
On the monthly chart, the price is showing Bollinger band breakout on the upside with expansion of bands indicating price is likely to continue in the direction of the trend. Thus, the stock is a buy at current level of Rs 575 and on dips to Rs 565 for a target of Rs 640 levels with stop loss of Rs 555.
V-Guard Industries: Buy | CMP Rs 238| Stop loss Rs 225| Target Rs 275-280 | Return 17%
The stock had seen rounding base formation between Rs 170 and Rs 220 levels over six months period. Price witnessed breakout from the pattern at the start of the month with strong price momentum and volumes.
Since then the stock has been consolidating its gains above the breakout level and forming a short-term base for next leg of up move. Now the price has moved above this small congestion zone with Bollinger band breakout and volumes.
Also, the counter has seen high volume action in last one month suggesting buying participation. The stock is a buy at current level of Rs 238 and on dips to Rs 234 for target of Rs 275-280 levels with stop loss of Rs 225.Disclaimer: The author is Head of Technicals and Derivatives, Sanctum Wealth Management. The views and investment tips expressed by investment expert 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.