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Last Updated : Dec 03, 2018 07:52 AM IST | Source: Moneycontrol.com

Cautious on market ahead of RBI credit policy, OPEC meeting; top 5 buys for 6-12% returns

Key resistance on the upside is 100-day moving average around 10,950 and mark of 11,085 which is 61.8 percent retracement of 1,700 points fall during September-October, said Shabbir Kayyumi of Narnolia Financial Advisors

Moneycontrol Contributor @moneycontrolcom
 
 
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Shabbir Kayyumi

Narnolia Financial Advisors

Nifty managed to close near its high of the series in the month of November. The index, importantly, filled the bearish gap which was in the range of 10,750-10,811 made during severe fall in September-October this year. Nifty also closed above 200-DMA (10,744) and 50-DMA (10,610) indicating the return of normalcy in the market.

Nifty futures rollover percentage for December expiry has been 71 percent which is lower as compared to 75 percent of last month’s rollover percentage. Even Open Interest in the next month contract is 1.9 crore, lower than 2.13 crore open interest in the last expiry indicating caution in the market ahead of various events ahead: RBI credit policy, OPEC meeting, state election results, etc.

Key resistance on the upside is 100-day moving average around 10,950 and mark of 11,085 which is 61.8 percent retracement of 1,700 points fall during September-October.

On the lower side, lower time frame trend line support is around 10,680 and 20-DMA at 10,620. Nifty will be trading with bullish tone unless it decisively breaches these levels. Options data indicates an immediate trading range between 10,600 and 11,000 marks. RSI is rising and is at 66 on daily time frame suggesting sustainability of strength in current up move.

Bank Nifty is trading above its 200-DMA (26,010) suggesting bulls are in action on the lower side. Immediate resistance is around 27,200 and support around 26,400.

Here is a list of five stocks which could give 6-12 percent return in short term:

Hero Motocorp | Rating: Buy around Rs 3,000 | Target: Rs 3,350 | Stop loss: Rs 2,900 | Upside: 12 percent

After hitting the low of Rs 2,048, Hero Motocorp has reversed from its downswing and formed a morning star which suggests upside momentum in the coming days. Bullish crossover in MACD below central line and sustainability of RSI above 9-day EMA indicate bullishness.

Moreover, the emergence of bullish Belt Hold candlestick pattern on the daily chart is giving more strength to bulls. One can take entry in the stock around Rs 3000 with a stop loss at Rs 2,900 for the target of Rs 3,350.

Cadila Healthcare | Rating Buy above Rs 366 | Target: Rs 400 | Stop loss: Rs 347 | Upside: 9 percent

After hitting the peak of Rs 432, Cadila Healthcare slipped at lower levels from where chances of developing a demand was higher and prices took support from the previous support on the daily chart. As of now, the formation of a double bottom on the daily chart is giving cues to accumulate this stock at lower levels.

The RSI also has bounced from the oversold zone and presently it has indicated a steep rise. As long as it sustains above Rs 347 marks, a possibility of moving on the upside is higher and it can hit our first target of Rs 390 and the second target of Rs 400 with an ease. Buy Cadila above Rs 366 with a stop loss of Rs 347, target Rs 400.

Cipla | Rating: Buy above Rs 536 | Target: Rs 580 | Stop loss: Rs 510 | Upside: 8 percent

Cipla bottomed near Rs 500-510 and has been consolidating for last few days on the daily chart. The emergence of green candles near the support line on the daily chart indicates an upside movement in the coming sessions. The scrip has taken support of the falling trend line and the price has started moving on the upside.

Positive divergence of RSI on the daily chart is also creating a positive rhythm in the scrip. Furthermore, sustainability of RSI above 50 adds the conviction of buying the scrip above Rs 536 for the target of Rs 580 with a stop loss of Rs 510.

Glenmark Pharma | Rating: Buy around Rs 645 | Target: Rs 695 | Stop loss: Rs 630 | Upside: 8 percent

Glenmark Pharma has confirmed the reversal from its current downtrend. It also gave bullish breakout above 20-DMA and 50-DMA. Thereafter it has been consolidating above these DMA’s since last few days. Rising trend line support creates buying opportunity in the scrip.

Inverted Head and Shoulder is also indicating positive move in the coming days. So some fresh buying is expected from the current levels in the short term. Therefore we recommend taking long position in the stock around Rs 645 with a stop loss Rs 630. Upside target is Rs 695.

Apollo Hospital | Rating: Buy around Rs 1,265 |Target: Rs 1,340 | Stop loss: Rs 1,215 | Upside: 6 percent

A few days back, scrip gave falling channel breakout on the upside. Presently, scrip is trading above all important moving averages that imply further upside momentum in the coming days.

Daily RSI is also looking firm along with other indicator and oscillator which become supportive for the price pattern. Buy Apollo Hospital at Rs 1,265 with a stop loss of Rs 1,215 for the target of Rs 1,340.

The author is a Head - Technical & Derivative 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.
First Published on Dec 3, 2018 07:51 am
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