In the very short term, as the majority of the momentum indicators are trading in overbought zones, the possibility of small retracement towards 10,500 levels cannot be denied.
Nifty witnessed another stellar rally last week and managed to give the highest closing of the last 4 months too. Meanwhile, weekly Heikin Ashi candles continued as a bullish flat bottom pattern and gave a closing above the previous week high indicating more fuel is left.
At the same time Nifty's 50 DMA has crossed over 100 DMA forming a Golden Crossover pattern, which suggests prices will be bullish in mid-term and buy on the dip strategy will yield better results.
After sustainable trading above 200 EMA for an entire week the new trading range for the Nifty is 10,500 as a lower boundary and 11,000 as an upper boundary.
In the very short term, as the majority of the momentum indicators are trading in overbought zones, the possibility of small retracement towards 10,500 levels cannot be denied. Though oscillators are in the overbought zone, MACD line is trading above the signal line which denotes that bulls are active and ready to take prices higher towards psychological marks of 11,000.
The banking index has managed to give a breakout by closing above the last 5-week's high, suggesting prices are ready to soar higher towards 24,000 mark. Sustainability above 100 DMA also suggests bullish bias to continue in the coming sessions.
Here is the list of three stocks which could return 10-19 percent in short term:
IndusInd Bank: Buy Around Rs 530 | Target: Rs 630 | Stop Loss: Rs 470 | Upside: 19 percent
The scrip spurted from a low of Rs 330 after forming Bullish Harami candlestick pattern, it showed pullback on the upside after making the high of Rs 577 and started consolidating there. Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further. The emerging line of polarity on the daily time frame of the chart is suggesting bullish momentum in the scrip. Indicators and oscillators are also showing a conducive scenario in the coming sessions. So based on the mentioned technical structure, one can go long in the scrip around Rs 530 for the target of Rs 630 mark with stop loss of Rs 470.
Sun Pharmaceutical Industries: Buy Around Rs 485 | Target: Rs 575 | Stop Loss: Rs 435 | Upside: 18 percent
The stock is in an uptrend as it is forming higher tops and higher bottom on the weekly chart. After a week's negative to sideways correction, the stock is showing a resumption of uptrend. The stock has been forming an inverted Head & shoulder pattern and it is waiting for the breakout on the upside. The Average Directional Index (ADX) line, an indicator of trend strength, has moved above the equilibrium level of 20 with rising Plus Directional line on the weekly chart. Thus, traders can accumulate this stock around Rs 485 with a stop loss below Rs 435 and a target of Rs 575 levels.
Dabur India: Buy Around Rs 465 | Target: Rs 515 | Stop Loss: Rs 435 | Upside: 10 percent
The stock saw a decline from Rs 515 to Rs 421. Since then, it has been consolidating in the Rs 465 to Rs 435 range at lower levels. On the weekly chart, the stock has formed a double-bottom reversal pattern. Volumes have been high at lower levels, indicating accumulation in the stock. After a recent rally from the lower end of the range, the stock formed higher lows, leading to an ascending triangle pattern on the daily chart. MACD has given a positive crossover with its average above equilibrium level of zero on the daily chart. Thus, stock can be bought at current levels and on dips to Rs 465 with stop loss below Rs 435 for a target of Rs 515 levels.
The author is Head of Technical Research at Narnolia Financial Advisors.Disclaimer: 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.