After three consecutive sessions of gains, the market witnessed profit booking. Post flat opening, the Nifty saw a steady decline through the day and bounced back in the last hour of trade. The Nifty finally settled at 11,046 down by 0.53 percent on August 28.
As for the broader market, BSE Midcap and Smallcap lost 0.92 percent and 0.64 percent respectively. The market breadth on the NSE was negative with 3 declining stocks compared to 2 advancing.
The Nifty has resistance zone around 11,150-11,200 where recent highs, 200-DMA and 38.2 percent Fibonacci retracement of the fall 12,103-10,637 are seen.
Thus, 11,200 needs to be taken out for the uptrend to continue towards 11,370 levels. On the downside, immediate support is placed at 10,950 level which is 38.2 percent Fibonacci retracement of the rise 10,637-11,142. A break below 10,950 could take the Nifty50 towards 10,830 and 10,750 levels.
In Nifty September monthly expiry options, maximum open interest for Put is seen at strike price 11,000 followed by 10,600; while for Call maximum open interest is seen at 11,200 followed by 11,700.
Thus, option distribution is suggesting upside resistance at 11,200 and sustaining below 10,950, markets may pressure on the downside.
India VIX jumped by 5.18 percent to close at 16.84 levels. VIX has bounced back from 16 levels and further rise towards 18 -19 will cap the upside. However, sustaining below 16 will help breach overhead resistance.
Here is a list of top five stocks which could give 10-16% return in the next 1-3 months:
ICICI Prudential Life Insurance: Buy | LTP: Rs 417 | Stop Loss: Rs 398 | Target: Rs 465 | Upside 11 percent
The stock hit an all-time high of Rs 509 in July last year and then declined to touch a low of Rs 277 in February this year. The rally from the low of Rs 277 faced resistance at Rs 405 odd levels.
For the last three months, the stock was consolidating below Rs 405 levels and on Wednesday it gave a breakout. The stock has formed a bullish long-body candle accompanied by strong volumes and managed to close above the consolidation zone to hit a fresh 52-week high.
MACD has given a positive crossover, thus, the stock can be bought at current levels and on dips towards Rs 410 with a stop loss below Rs 398, and a target of Rs 465 levels.
Tata Global Beverages: Buy | LTP: Rs 280 | Stop Loss: Rs 265 | Target: Rs 325 | Upside 16 percent
The stock is in an uptrend forming higher tops and higher bottoms on the daily chart after hitting a low of Rs 177 back in February.
The stock has been witnessing high volumes on the up move, but below-average volumes which indicate that long positions continue to hold their positions.
In late June, the stock touched a high of Rs 277 where 61.8 percent (271) Fibonacci retracement of the major fall was seen from Rs 328 to Rs 177.
After consolidating below Rs 277 levels, the stock on Wednesday gave a breakout with bullish long body candle and high volumes which indicates buying participation in the stock.
Price has given a breakout on the upside from the Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of the breakout on the daily chart.
MACD has given a positive crossover with its average above equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 275 with a stop loss below Rs 265, and a target of Rs 325 levels.
Avenue Supermarts: Buy | LTP: Rs 1,553 | Stop Loss: Rs 1,500 | Target: Rs 1,700 | Upside 10 percent
After hitting a low back in March, the stock has been moving higher along the rising support trend line connecting closing price of Rs 1,234 and Rs 1,397.
It has formed a base after consolidating in the range of Rs 1,530-1,230 odd levels. The stock has seen a breakout above Rs 1,530 levels.
If we look at the higher time frame weekly chart, the stock is in the process of forming a double bottom pattern with lows at Rs 1,230 odd levels.
MACD has moved above the equilibrium level of zero and is moving higher on the weekly charts. Thus, it can be bought at current levels and on dips towards Rs 1,535 with stop loss below Rs 1,500 for a target of Rs 1,700 levels.
Petronet LNG Ltd: Buy | LTP: Rs 260 | Stop Loss: Rs 248 | Target: Rs 295 | Upside 13 percent
The stock touched an all-time high of Rs 275 in November 2017 and then corrected down towards 200-odd levels in May last year.
The stock has formed multiple lows placed at Rs 200 levels. It has been forming higher lows for the last 8 months on the weekly chart which indicates buying coming in at lower level.
The recent swing lows were formed at 200-day moving average indicating as value area. The stock faced resistance at Rs 255 levels and witnessed a breakout on strong volumes.
The price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on daily as well as on the weekly chart.
Thus, the stock can be bought at current levels and on dips towards Rs 256, with a stop loss below 24, and a target of Rs 295 levels.
JSW Steel Ltd: Sell | LTP: Rs 206 | Stop Loss: Rs 213 | Target: Rs 185 | Downside 10 percent
The stock is in a long-term downtrend forming lower tops and lower bottoms for the last 11 months. After a bounce back from Rs 209-231, the stock has broken its swing low of Rs 209 and resumed its downtrend.
Last 3 sessions have witnessed above average volumes with negative price action indicating fresh selling pressure.
The stock has broken its 200-week moving average placed at Rs 232 and is acting as crucial resistance for the last few weeks.
MACD has given negative crossover with its average its below equilibrium level of zero on the daily chart. Thus, the stock can be sold at current levels and on rise towards 208 with a stop loss above Rs 213, and a target of Rs 185 levels.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)Disclaimer: 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.