Ashish Chaturmohta of Sanctum Wealth Management said as long as Nifty trades below 10,640 levels, we expect the market to retest 10,550 levels which is an important support level for the market.
Trade war and political uncertainty in Europe’s biggest economy - Germany - kept equity markets under pressure for most part of Monday's session. Recovery in the last hour of trade in frontline stocks saw the Nifty erasing partial losses to close at 10,657 levels, down 0.53 percent for the day.
After Friday’s bounceback, the index has failed to show follow-through action on the upside. The index faced a hurdle at the rising support trend line, connecting lows of 9,952 and 10,418, which is now acting as resistance for the market. As long as the Nifty trades below 10,640 levels, we expect the market to retest 10,550 levels which is an important support level for the market.
On the upside, if Nifty trades above 10,705 levels, it can rally towards 10,810 levels where the falling resistance connects the highs of 11,172 and 10,929.
In Nifty options, 10,600 put is seeing the highest open interest suggesting the market has support between 10,550-10,600 levels.
Here is a list of top 5 stocks that could return 8-13 percent in the next 1-2 months:
Asian Paints Limited: Buy| CMP: Rs 1,293| Stop loss: Rs 1,250| Target: Rs 1,400| Return 8%
The stock has seen a base formation between the levels of Rs 1,260 and Rs 1,100 over a period of nine months and witnessed a breakout from the same to hit an all-time high of Rs 1,332 in the month of May.
The price then corrected down to the previous high of Rs 1,260 which has acted as a strong support for the stock and then bounced back. The stock has taken a support at its 50-days moving average and crossed 20-DMA.
In Monday’s session, the stock has shown price momentum with a long bullish candle and good volumes which suggests resumption of the uptrend.
The Relative Strength Index or the RSI on the daily chart has given a positive crossover with its average. The daily MACD has given a positive crossover with its average and moved above the neutral level of zero indicating corrective phase is over.
Thus, the stock can be bought at current levels and on dips towards Rs 1,280 with a stop loss below Rs 1,250 and a target of Rs 1,400 levels.
Infosys Limited: Buy| CMP: Rs 1,335| Stop loss: Rs 1,290| Target: Rs 1,450| Return 8.6%
The stock has seen a base formation between the levels of Rs 1,280 and Rs 900 over a period of two years. Last week, the price saw a breakout from this consolidation and hit a new high of Rs 1,340 in Monday’s session.
Typically, the stock breaking out at all-time highs continue to see new highs in the near future as well. The stock is taking support at its 21-days moving average and then started trending higher.
The price has also given a breakout from Bollinger band with the expansion of band and closed above the upper band. Thus, the stock can be bought at current levels and on dips towards Rs 1,320 with a stop loss below Rs 1,290 and a target of Rs 1,450 levels.
Godrej Industries Limited: Buy| CMP: Rs 618| Stop loss: Rs 585| Target: Rs 700| Return 13%
The stock has been in an uptrend on the long-term charts forming higher tops and higher bottoms on the long-term chart. For the last eleven months, the stock has been in a corrective phase and was trading sideways to negative in a narrow range of Rs 699 to Rs 512 levels.
The stock has seen a bounce back from Rs 550-512 zone on multiple occasions indicating a strong support zone for the stock. The daily MACD line has given positive crossover with its average suggesting stock is likely to see the start of a fresh uptrend.
The stock has moved above the falling resistance trend line connecting highs of Rs 699 and Rs 646 on the weekly chart and was consolidating above it for the last few weeks.
Thus, the stock can be bought at current levels and on dips to Rs 607 with a stop loss below Rs 585 for a target of Rs 700 levels.
Sundram Fasteners Limited: Buy| CMP: Rs 643| Stop loss: Rs 615| Target: Rs 720| Return 12%
The stock is in a long-term uptrend forming higher tops and higher bottoms on the daily chart and weekly chart. The stock has seen in a consolidation zone between the levels of Rs 645 and 545 odd levels over the last four months with a positive bias.
The price has been taking support at its 100-day moving average. The Relative Strength Index on the daily chart has given a positive crossover with its average suggesting that the stock is likely to see a breakout on the upside.
Thus, the stock can be bought at current levels and on dips towards Rs 635 with a stop loss below Rs 615 and a target of Rs 720 levels.
Indiabulls Housing Finance Limited: Sell| CMP: Rs 1,115| Stop loss: Rs 1,160| Target: Rs 1,020| Return 8.5%
The stock has formed a bearish head and shoulders pattern on the weekly chart. It witnessed a breakdown from the pattern in the month of May and then saw a bounce back towards Rs1,270 odd levels.
Here it faced some resistance at its 200-day moving average and then saw a resumption of the downtrend. Also, on the daily chart, the price has given a breakout from the Bollinger band with the expansion of band and closed outside lower band suggesting the start of a fresh trend in the direction of the breakout.
The price has been trading below its long-term as well as short-term moving averages. MACD line has given negative crossover with its average below neutral level of zero on the daily chart.
Thus, the stock can be sold at current levels and on the rise towards Rs 1,125 with a stop loss above Rs 1,160 and a target of Rs 1,020 levels.Disclaimer: The author is Head Technical 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.