Going ahead into a week with decent earnings data so far coupled with a state election, the index is expected to continue with the upward momentum," says Dinesh Rohira, Founder & CEO at 5nance.com.
The Indian equity market continued on a strong trend channel from its lowest level for consecutive weeks despite weak support from global and domestic factors. The Nifty opened with an upward gap on Friday and managed to breakout from its strong resistance of 10,650 on a closing basis.
Despite a poor set of earnings announcements and truncated momentum, the index settled with a 1.21 percent gain on a weekly basis to close at 10,692 levels. It managed to stretch above 10,700 levels on an intraday basis, but profit booking at higher levels pulled the index lower. However, it signed off on a bullish note going into the May series.
Although no major formation was seen on the charts, it made a relatively bullish candlestick pattern with the white body on its daily price chart. There was no divergence in price with the weekly Relative Strength Index (RSI) level at 60, but the moving average convergence divergence (MACD) indicated a movement towards a positive crossover.
This week, the index is expected to continue its upward momentum. However, its resilience towards volatility, as witnessed in the past session, could turn the index choppy in the backdrop of profit-booking at higher levels or if any negative sentiment resume.
It will be advisable to adopt a buy on dips and sell high strategy until the market witnesses a strong rally. We maintain an upward bias on a weekly basis at 10,810 levels with a stop-loss below 10,570 levels.
Here is a list of top three stocks which could see up to 10% upside in short term:
Gravita India: BUY | Target: Rs 220 | Stop loss: Rs 187 | Return: 10%
Gravita India witnessed a strong rebound in last month after consolidating from earlier peak to take a crucial support at Rs 146 levels.
Thereafter, it maintained to trade on uptrend trajectory. Last week it made a fresh peak on its daily price chart although it couldn’t hold the level but signaled a positive breakout from its upper band. The scrip made a 12 percent gain on weekly basis.
The scrip formed a strong bullish candlestick pattern on its weekly price chart after forming a reversal pattern in past session.
Further, a secondary momentum indicator witnessed a revival with weekly RSI level shifting upward at 68 coupled with positive cue intact on MACD.
The support level for scrip is currently placed at Rs 177 and resistance level from the upper band at Rs 134. We have a buy recommendation for Gravita India which is currently trading at Rs 199.75
Prakash Industries: BUY | Target: Rs 237 | Stop loss: Rs 205 | Return: 8%
The scrip witnessed a health consolidation from Rs 256 levels towards 168 levels on its daily price chart during past session before creating a reversal trend.
The scrip took a strong support at lower band and continued to rebound on uptrend trajectory coupled with strong volume support. Further, it managed to breakout from its crucial short-term EMA levels in the last session indicating a positive trend.
On the daily price chart, after closing with about 4 percent intraday gain the scrip made a decent bullish candlestick pattern.
The weekly RSI level at 62 coupled with positive divergence on MACD indicates a momentum for the scrip in the coming session. The scrip has a support at Rs 186 levels and resistance level at Rs 262. We have a buy recommendation for Prakash Industries which is currently trading at Rs 218.85.
Rallis India: SELL | Target: Rs 206 | Stop loss: Rs 228 | Return: 6%
Rallis India continued to consolidate on its daily price chart despite making a decent attempt to recoup the loss but the selling pressure at higher level aided the price to breach below its crucial level placed at Rs 238.
Further, during a closing session, the price got below its 20 and 50-days EMA levels indicating a negative signal. The scrip formed a solid bearish candlestick pattern on its weekly price chart after breaching below 20-days EMA level indicating a sustained pressure.
Further, the secondary momentum indicator continued to indicate negative signal with RSI at 38 levels coupled with bearish crossover just happening on MACD line. The scrip is facing a resistance at Rs 235 levels and support at Rs 198 levels. We have a sell recommendation for Rallis India which is currently trading at Rs 219.Disclaimer: The author is Founder & CEO, 5nance.com. 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.