Nifty registered a new high in the past week by touching 14,750-mark; however, intense profit booking in the second half of the week pushed it lower below 14,500 levels. Though Nifty closed in the red on a weekly basis, the index witnessed a Flat bottom green Heikin-Ashi candlestick formation, suggesting that on the larger timeframe, the market remains in the bullish zone.
In the last few days, RSI had given a breakout by trading above 50 levels from below and made a high of 80. Thereafter, it is retracing towards the centerline placed at 50 levels. This behaviour is called as 'RSI PBB' setup. RSI PBB is a pullback buy setup which indicates, once RSI turns its tail upside after taking support from the zone of 45-55 levels, the target will be previous swing high of RSI which was 80 or previous swing high of prices (14,750). Currently, the Nifty is going through this setup and we expect a higher price movement once it crosses and sustains above 14,500 levels.
Nifty has formed outside bar formation on the weekly chart and traded in a zone of 14,300-14,750 in the last few days. This is typical behaviour of wave 'Implied Volatility (IV)' in progress and another impulse wave for higher targets will progress once we get confirmation of the conclusion of wave 'IV'.
Though one needs to get cautious if Nifty starts trading below 20-day moving average (DMA) standing around 14250.
After hitting a new life high, Bank Nifty traded on a negative note and closed in the red. The banking index is going through a price correction and unless it trades above its 5-day SMA standing around 32,000, it can move towards Fibonacci retracement levels standing around 30,500.
Here is the list of three stocks which could give 5-15 percent return in short term:
Tata Steel: Buy Around Rs 640 | Target: Rs 740 | Stop Loss: Rs 585 | Upside: 15 percent
The stock has maintained a strong base near Rs 585- Rs 595 zone and current sustainability above key moving averages have improved the bias with a positive candle formation on the hourly chart with a higher highs-lows. The RSI also has indicated a trend reversal to signal a buy. With the chart looking attractive, we suggest buying this stock around Rs 640 for a target of Rs 740, while keeping the stop loss of Rs 585.
Britannia Industries: Buy Around Rs 3,600 | Target: Rs 3,900 | Stop Loss: Rs 3,440 | Upside: 8 percent
The stock is expected to give Cup and Handle breakout on daily chart with decent volume. Bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 and 50 DMA is indicating strength. Key support lies at Rs 3,450- Rs 3,460 zone. Until this breaks decisively, a long position can be held. Investors can take entry around Rs 3,600 level with stop loss of Rs 3,440 on a closing basis for the target of Rs 3,900.
Reliance Industries: Buy Around Rs 2,030 | Target: Rs 2,130 | Stop Loss: Rs 1,970 | Upside: 5 percent
On the daily and weekly charts, the stock is showing a retest of the neckline of its earlier reversal formation which is broadly positive. The incremental volume activity post-breakout formation indicates further bounce back from the neckline. The stock is trading well above short-term as well as medium-term averages, which indicates that an uptrend wave is likely to continue in the near-term. One can buy the stock around Rs 2,030 for the target of Rs 2,130 with stop loss of Rs 1,970 mark.
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