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Last Updated : Aug 22, 2017 09:22 AM IST | Source: Moneycontrol.com

Bulls to have upper hand above 9,880; top 4 stocks which can give up to 24% return

9,950 will act as an immediate hurdle and any move above this level will attract fresh buying interest that can drive Nifty towards 10,025-10,138 levels respectively.

 
 
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Aditya Agarwal

Way2Wealth Brokers Pvt. Ltd

Last week, the price action was in line with expectation as we have highlighted in our previous week's write up regarding the importance of 9700-9675 zone. The bulls respected that level by rallying sharply towards 9,950 level.

During the week, the level of 9,950 coincided with the previous support level which was broken its previous week fall hence the said level reversed its role and acted as an immediate hurdle.

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The weekly relative strength index, RSI (14) momentum indicator indicates an oversold condition compare to its previous weekly fall. Also, the Higher Top Higher Bottom formation on the weekly chart is still positive.

Hence, we believe that 9700-9675 zone continue to act as a strong support and only a decisive closing below this level will trigger fresh sell-off.

Profit booking from higher levels was quite evident in Monday’s session. Broader indices opened on a positive note on the back of buying in private banking sector but Nifty failed to sustain above 9,880 levels.

In the second half of trade, sharp sell-off was seen across the board and particularly in pharma, PSU banking, capital goods and infrastructure sector that dragged Nifty below 9,800 levels and it closed at its day’s low level of 9,750.

Option data also indicates towards the rangebound movement for coming sessions. Call writing at 10,000 strike option will act as stiff supply zone for nifty in short-term whereas put writing at 9700 will prove as support for Nifty.

However, if Nifty breaches 9700 and sustains below that then in that case index is likely to correct towards 9,600-9,560 which coincided with the daily 89-EMA and even possibility of testing the strong support of 9,500 can’t be ruled out.

On the other side, 9,950 will act as an immediate hurdle and any move above this level will attract fresh buying interest that can drive Nifty towards 10,025-10,138 levels respectively.

Here is a list of top 4 trading stocks which can give up to 24% return in short-term:

ITC: Buy around 282 to 277| Target Rs320| Stop loss 265 (Timeframe 15 to 20 trading sessions)| Return 14%

ITC has been in an uptrend since late December 2016 and registered an all-time high of around 355 during early July 2017.Subsequently, we saw almost a vertical decline in stock which was followed by gradual correction towards 270.

The level 270 coincided with the multiple support zone first, the 61.8% retracement of its entire move from the bottom of 219 to 355 comes near 270, secondly, the previous multiple daily swing lows are placed near 270 and also 200-SMA is placed near 270.

Looking at the weekly chart, the RSI (14) momentum indicator has precisely tested the Rising Trend line drawn from the bottom of June 12, 2015, and started rallying northward.

Considering the above evidence, we expect this stock resume its uptrend hence we advocate traders to buy this stock in a range of 282 to 277 with a price target of 320 and stop loss placed below 265.

Concor: Buy around 1220|Target Rs1420/1520| Stop Loss Rs1110| Timeframe 1-2 months| Return 24%

Looking at the weekly chart, the stock has confirmed its breakout from a Descending Triangle pattern in early April 2017. This triggered an acceleration of bullish momentum. In that optimism, the stock rallied and hit a fresh 52-week high of 1250.

Subsequently, a bit of profit booking was seen which we term as a price wise as well as the time-wise correction. After several weeks of consolidation, stock resumed its uptrend during last week.

Weekly 9-45 EMA is still positive and is indicating that the current trend is still bullish. The daily RSI (14) entered inside the 60 level which is a bullish indication.

Hence, we are recommending traders to buy this stock in a range of 1200-1220 with a price target of 1420/1520 and Stop loss placed below 1110.

Piramal Enterprises: Sell around Rs2650| Target Rs2440| Stop Loss Rs2730| Timeframe 7 to 10 trading session| Return 6%

Last week, the stock broke the rising trend line and corrected towards the daily 89-EMA placed near 2665. Looking at the daily chart, the 9 periods EMA has signaled negative crossover and 45-EMA indicate the shift in a trend.

Also, the daily RSI (14) breached the 40 levels which is a bearish signal. Hence, we recommend traders to go short around 2650 with a price target of 2440. Stop loss should be placed above 2730.

Tata Communication: Sell at current market price at Rs629| Target 570| Stop Loss 661| Timeframe 10 to 12 trading session| Return 10%

Looking at the weekly chart, the stock has confirmed its breakdown from Double Top pattern during the early August 2017 by breaching its neckline pegged near 620. This triggered fresh sell-off in stock as a result stock slide sharply towards 570 level.

The level of 570 coincided with the weekly 89-EMA which acted as a sheet anchor and we saw a decent pullback in last week.

At this juncture, daily chart has signal Negative Reversal which is a bearish pattern. Also, due to breakdown from the double top pattern, the weekly chart has formed a Lower Top Lower Bottom formation.

Considering the above evidence, we recommend traders to go short in this counter at the current level of 629 with a price target of 570. A strict stop loss should be placed above 661.

Disclaimer: The author is Head Technical Research, Way2Wealth Brokers Pvt. Ltd. The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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First Published on Aug 22, 2017 09:22 am
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