Ashish Chaturmohta
The market opened in the positive but couldn’t sustain its gains. Profit booking in the latter part of the session pulled the markets lower on Wednesday. The Nifty50 closed at 10,305 level down by 1.58 percent for the day.
Broader market indices BSE Midcap and Smallcap outperformed the benchmark indices with a loss of 1.08 percent and 1.24 percent respectively for the day. The market breadth on NSE was in favour of bears with advance-decline ratio of 2:3.
For the day, Nifty has formed bearish engulfing candle for the day at a cluster of resistances. The index has hit its 200-day exponential moving average (EMA), 61.8% Fibonacci retracement of entire fall 12,430-7,511, and trendline connecting highs of 9,889 and 10,329 which all come around today's high of 10,553.
Thus, indicating 10,550 as key resistance level which needs to cross on a sustainable basis uptrend to continue. A move below 10,270 levels will take the Nifty50 towards 10,000-9,900 levels where the support zone is seen.
Here is a list of top 5 stocks that could give 10-17% return in the next 1-3 months:
Berger Paint: Buy | LTP: Rs 541 | Stop Loss: Rs 510 | Target: Rs 635 | Upside 17%
The stock has seen a sharp decline from the high of 597 in the month of February to a low of 389 in March. Price then bounced back to 546 and corrected down towards 431 levels.
After the recent rally to current levels, the stock has formed a bullish double-bottom pattern with higher 2nd bottom. In Wednesday’s session, the stock has formed a long body bullish candle with high volumes on the daily chart that indicates buying participation in the stock. Thus, showing signs of a breakout on the upside.
Price has given a breakout on the upside from Bollinger Band with the expansion of the bands on the daily chart indicating a continuation of the trend in the direction of the breakout.
MACD line has given a positive crossover with its average and moved above the equilibrium level of zero on the weekly chart.
Thus, the stock can be bought at current levels and on dips towards 533 with a stop loss below 510, and a target of 635 levels.
In the months of February and March, the stock witnessed a sharp fall from 453 to 210 odd levels. The bounce back from the low faced resistance near the 200-Day moving average and moved back to test the low of 210.
Since then the prices have rallied above the long term 200-day moving average. The stock has formed a bullish double-bottom pattern and has given a breakout on the upside with bullish body candle and high volumes.
Price has also crossed the 38.2% Fibonacci retracement of the entire fall 453-210. MACD line has given a positive crossover with its average above equilibrium level of zero on the daily chart.
The Average Directional Index (ADX) line, is moving up from an equilibrium level of 20 with a rising Plus Directional line on the daily chart. Thus, the stock can be bought at current levels and on dips towards 307 with a stop loss below 295, and a target of 360 levels.
Coromandel International Ltd: Buy | LTP: Rs 732 | Stop Loss: Rs 695 | Target 850 | Upside 16%
The stock hit a low of 543 in the March after correcting from the high of 642. After hitting the low, the price has been in an uptrend forming a top and higher bottom on the daily chart.
The stock has been trending higher along with the 20-day moving average which has been acting as support on declines.
Currently, price is trading at all-time high levels and is consolidating in a narrow range. It has formed a bullish pole and flag continuation pattern on the daily chart.
The Average Directional Index (ADX) line, is turning up after flattening out with the rising Plus Directional line on the daily chart. Thus, the stock can be bought at current levels and on dips towards 720 with a stop loss below 695, and a target of 850 levels.
Nestle India Ltd: Buy | LTP: Rs 16,708 | Stop Loss: Rs 16,200 | Target: Rs 18,300 | Upside 10%
From March low of 12,200, the stock has seen a sharp rally to hit an all-time high of 18,369 in April. Price then corrected to a low of 16,100 odd levels.
Post bounce back, the price has again retested the low of 16,100 and is now showing reversal on the upside. For the last couple of days, the stock has seen a positive price action with above average volumes indicating buying coming in at lower levels.
Relative strength index and Stochastic have given positive crossover with their respective averages on the daily chart.
Thus, the stock can be bought at current levels and on dips towards 16500 with a stop loss below 16200, and a target of 18300 levels.
Exide Industries Ltd: Sell| LTP: Rs 150 | Stop Loss: Rs 157 | Target: Rs 130 | Downside 13%
The stock is in a long term downtrend forming lower tops and lower bottom on the weekly chart. After hitting 125 in March, price bounced back to 175 levels where it faced resistance at the 200-day moving average.
Also, at the same levels, 61.8% Fibonacci retracement of the swing 208-125 was seen. Thus, indicating the bounce back is after the stock has seen reversal down again with high volume sell off-price action.
The price is trading below its short term 21-day moving average which was earlier acting as support is now acting as resistance. The relative strength index has given a negative crossover with its average on the weekly chart.
Thus, stock can be sold at current levels and on the rise towards 153 with a stop loss above 157 for a target of 130 levels.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)
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