Hadrien Mendonca
Thursday’s rangebound session turned volatile in the second half as indices swung lower in the last hour of trade. The Nifty reversed from its 10,710-10,720 resistance zone. Smaller time frame analysis depicts early signs of distribution.
However, it is important for the index to hold above the breakout zone of 10,640 levels for a meaningful bounce back.
The Bank Nifty outperformed and continues to sustain above the inverse head and shoulder breakout zone of 25,350 which is also its crucial support.
If the inverse head and shoulder pattern unfold the way it should, then the breakout opens up another 900 points upside on the Bank Nifty. It would be wise for traders not to short the index till the important support of 25,350 is broken on a closing basis.
These three stocks could deliver up to 8-12 percent returns in the short term:
City Union Bank: Buy| Target: Rs 204| Stop loss: Rs 179| Returns 9%
The stock has been consolidating for the past eleven weeks and is finally on the verge of breaking out from a Symmetrical Triangle pattern on the weekly chart.
Our daily chart analysis indicates that the stock has broken out from a Pennant pattern which further accentuates our bullish stance on the stock.
Rising volumes and relative strength further indicate that the momentum is likely to extend further. We expect the stock to make an attempt to rally towards its potential target of Rs 204 in the medium term.
Khadim India Ltd: Buy| Target Rs 845| Stop loss Rs 753| Returns 8%
The stock broke out from the Cup and Handle pattern on the daily chart. The breakout aided the stock to retrace and retest the breakout zone.
Khadim has finally reversed resuming its primary uptrend. The upswing has been accompanied with a smart uptick in traded volumes which further adds to our bullish stance on the stock. We expect Khadim India to rally towards its potential target of Rs 845 in the medium term.
Nelcast Ltd: Buy| Target: Rs 105| Stop loss: Rs 89| Returns 12%
In the past five months, the stock has been stuck in a declining trend. The declining trend found support around its 200-DEMA in the recent past and bounced back.
Currently, Nelcast has also surpassed its short-term averages. The recent upswing has aided the stock to break out from a declining trendline on the daily chart.
With rising volumes and relative strength indicating a further upside, we expect Nelcast to rally towards its potential target of Rs 105 in the medium term which translates into a 12 percent upside from the current market price.
Disclaimer: The author is Senior Technical Analyst, IIFL. 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
