Nifty’s 5-week SMA is rising and is placed around 11,611, which implies weakness is only below the crucial support of 11,611
NDA's convincing victory on May 23 triggered strong buying on bourses. Nifty scaled a life high of 12,041. It has broken out from strong resistance trend line placed on hourly time frame around 11,700 and managed to cover an unfilled bearish gap placed between 11,712 and 11,657 indicates strong follow up buying in progress and index will trade with bullish bias unless a close below this trend line.
Recently RSI on weekly time frame took a reversal from 50 mark forming pullback buy pattern, indicating completion of correction sell leg and resumption of the original medium-term bull trend.
Nifty’s 5-week SMA is rising and is placed around 11,611, which implies weakness is only below the crucial support of 11,611. Till then one should opt for buy on dip strategy.
Moreover, immediate resistances for the index are: 11,883 (earlier life high), 11,930 (trend line resistance), and 11960 (upper Bollinger band). Crucial support lies around 11,591, which is weekly low price after the exit poll.
As long as the index is trading above 11,591, we maintain buy-on-dip strategy. Moreover, Nifty trading above 11,970 will accelerate up move taking it towards 12,200.
Here are the top stock trading ideas that can give good returns:
Tata Motors: Buy around Rs 177 |Target: Rs 210| Stop loss: Rs 159| Upside: 19 percent
The stock is moving in a well defined horizontal line of multiple touch point and appears to have strong support around Rs 169-170 as it bounced back multiple times from this demand line. It also maintained its uptrend on the short-term chart and is trading well above its short-term moving averages.
The momentum oscillator, RSI also favours the price pattern. One can accumulate the stock around Rs 177 for an upside target of Rs 210 and a stop loss below Rs 159.
Indian Bank: Buy around Rs 260 |Target: Rs 300| Stop loss: Rs 238| Upside: 15 percent
The stock has corrected from the peak of Rs 373 and has shown signs of bottoming out around Rs 224-230. Formation of bullish candle on the daily chart is showing a halt in its downswing suggesting positive bias in stock.
We recommend a buy in this scrip at Rs 260 with a stop loss of Rs 238 for an upside target of Rs 300.
Canara Bank : Buy Around: Rs 270 |Target Rs 300| Stop loss: Rs 255| Upside: 11 percent
The stock gave a falling trend line break out on the daily chart. Formation of a double bottom on the weekly chart is around the corner that suggests trend reversal is imminent. From last few days, it has been consolidating above the same that implies strength. Formation of long bull candle while giving trend line breakout indicates stock can surge further.
We recommend buying Canara Bank around Rs 270 with a stop loss of Rs 255 for the target of Rs 300.
Cipla: Buy around Rs 560 |Target: Rs 600| Stop loss: Rs 539| Upside: 7 percent
The counter appears to have formed a short-term bottom as it repeatedly attracts buying interest around Rs 555-560. Formation of Cup & Handle pattern on the daily chart which is a continuous pattern indicate upside move. Buying momentum will accelerate above Rs 570 where pattern breakout is expected and it can attempt to retest its interim top in coming sessions.
Declining histogram of MACD is also suggesting upside momentum. Positional trader can create fresh long position around Rs 560 with a stop loss below Rs 539 on closing basis for an initial target of Rs 600.
Maruti Suzuki India: Buy around Rs 6,950 |Target: Rs 7,350| Stop loss: Rs 6,688| Upside: 6 percent
Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. Currently, it has given breakout from its falling channel price pattern with decent volume. Moreover, the formation of morning star with long bull candles suggests upside.
Positive divergence in RSI is also lending support to the price action. Traders can enter at around Rs 6,950 for the target of Rs 7,350 while keeping a stop loss of Rs 6,688.
The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.