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Consolidation on higher side likely, buy these 3 stocks for 10-15% return

RSI has cooled off in the last week by retracing the 65-mark from the overbought zone on the daily time frame and has the potential to touch the previous swing high.

November 23, 2020 / 10:50 AM IST
 
 
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The Nifty continued to soar as it made flat bottom green Heikin-Ashi candlestick on the daily, weekly, and monthly time frames that is supportive of a further bullish movement.

When we take trend-based Fibonacci projection from low of 10,790 to the high of 12,023 and then add crucial marking of 1.618 to the retracement level of 11,535, the target on the higher side comes to 13,470.

At the same time, the continuation of consolidation on the higher side cannot be ruled out, supported by RSI oscillator movement, which has continued to trade above the 50-mark.

RSI cooled off last week by retracing towards the 65-mark from the overbought zone on the daily time frame and has the potential to touch the previous swing high. The line of polarity is standing around 12,550 is the key support on the downside.

The Bank Nifty continued its dominating rally in the previous week and managed to give a strong breakout by trading above the 29,000-mark. Moreover, 10-DMA stands near 28,500 and one can opt for a buy-on-dip strategy as long as these are strong support levels.

Close

Here are three stocks that can give 10-15 percent return in the short term:

ITC: Buy around Rs 190 | Target: Rs 220 | Stop Loss: Rs 174 | Upside: 15 percent

After a prolonged downtrend, the stock is showing signs of life as it gave falling trend line breakout on upside at lower levels, which suggests the confirmation of the reversal is round the corner. The daily RSI is bouncing back from the important support level along with positive crossover in stochastic and other momentum indicators that indicate a short-term pullback on the upside in the coming days. Traders can initiate buying at around Rs 190 level for the target of Rs 220 a with stop loss of Rs 174.

Bharti Airtel: Buy around Rs 480 | Target: Rs 535 | Stop Loss: Rs 448 | Upside: 11 percent

The stock is expected to give head and shoulders breakout on the daily chart with a decent volume. The bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 and 50 DMAs indicate strength. Key support lies at Rs 450, until this breaks decisively, long position can be held. Investors can take entry at around Rs 480 with a stop loss of Rs 450 on a closing basis for the target of Rs 535.

Sumitomo Chemical India: Buy around Rs 280 | Target: Rs 310 | Stop Loss: Rs 260 | Upside: 10 percent

The formation of a lower shadow near the foot of the weekly trend line indicates that declines are being bought and momentum can reverse. After retesting strong support, the scrip has been forming higher highs and lows from the last one week. Daily MACD showing positive crossover at lower reference line suggest a pullback. Sustainability above significant moving averages provides key support at lower levels. Once the stock gives a decisive close above Rs 285, it will ready to move on the upside till Rs 320. This view, however, will invalidate if the stock gives a close below Rs 260.

(Shabbir Kayyumi is the Head of Technical Research at Narnolia Financial Advisors Ltd.)

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Shabbir Kayyumi is the Head of Technical & Derivative Research at Narnolia Financial Advisors. He has rich experience in Technical Analysis across Equities, Commodities, Global Indices and Global Currencies. His strength lies in Elliott wave and Neo Wave theory while he is equally proficient in Candlestick patterns, Fibonacci, price projection, classical Dow Theory, and inter market analysis for interpreting market trends.
first published: Nov 23, 2020 10:50 am

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