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Correction likely in short term but mid-term trend still in favour of bulls; these 3 stocks can return 10-25%

Overall Nifty is trading with bullish bias and it has a potential to trade towards 15,000 unless it gives closing below its 5-week SMA and last week's low standing around 14,350.

January 18, 2021 / 12:15 PM IST
 
 
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Nifty has taken resistance from its upper trend line of the rising channel placed around 14,650, flat bottom green Heikin-Ashi candle formation on a weekly and monthly time frame indicates continued bullishness on the larger timeframe.

Recently, Nifty has seen moving average crossover setup of 10*20 SMA on a monthly time frame which is a sign of a long term bullish market and in such a scenario one has to adopt buy on dip strategy. Moreover, on a weekly timeframe index is trading well above the important moving averages, 5 SMA/10SMA/20SMA that suggests the mid-term trend is in favour of bulls and any price fall will be an opportunity to adopt re-entry.

India VIX rose higher by almost 20 percent in the last one week; however one needs to be careful only above 25.50 which is crucial resistance for volatility index. Furthermore, any decisive move below 14,350 will be a sign of short term trend reversal which can push prices lower towards 14,100 where strong supports and 20 DMA are placed.

Overall Nifty is trading with bullish bias and it has a potential to trade towards 15,000 unless it gives closing below its 5-week SMA and last week's low standing around 14,350.

Bank Nifty traded with a positive note last week and hit a lifetime high of 32,718. The banking index is trading with bullish bias and unless it trades below its 5-week SMA standing around 31,300, it has the potential to move towards Fibonacci extension levels standing around 34,000.

Close

Here is the list of three stocks recommendations which could return 10-25 percent in the short term:

Vodafone Idea: Buy Around Rs 13.50 | Target: Rs 17 | Stop Loss: Rs 11 | Upside: 25 percent

The scrip spurted from a low of Rs 2.40 and it is at the verge of rounding bottom breakout which is showing pullback on the upside in the upcoming sessions. Currently, it is waiting for the breakout on the north side 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. Indicator and oscillator are also showing conducive scenario in the coming sessions. So based on the mentioned technical structure one can go long in the scrip around Rs 13.50 for the target of Rs 17 mark with stop loss of Rs 11 mark.

ITC: Buy Around Rs 215 | Target: Rs 245 | Stop Loss: Rs 195 | Upside: 14 percent

Stock has given a sharp rally from Rs 166 to Rs 215 and after that, it went into consolidation as prices were seen fluctuating in the range of Rs 197 to Rs 215 levels. This week, the stock has managed to give consolidation breakout above the Cup and Handle pattern on a daily time frame and also managed to close above it. The positive divergences on secondary oscillators suggest further upmove in the prices as the breakout is well supported by additionally higher volumes. Buy ITC around Rs 215 with stop loss of Rs 195 for target of Rs 245 and Rs 260 levels of upside.

State Bank of India: Buy Around Rs 295 | Target: Rs 325 | Stop Loss: Rs 275 | Upside: 10 percent

This counter appears to have registered a trend line breakout with a close above its multi-week consolidation zone on the weekly line chart. A strong bullish candle with decent volume is showing more upside move in the coming sessions. Sustainability above all the significant moving averages is showing an upside move. If the stock closes above Rs 305 levels, it should eventually head higher towards its initial range breakout target of Rs 325. For the time being, positional traders are advised to buy on dip around Rs 294 into this counter for a target of Rs 325, with a stop below Rs 275 on a closing basis.

Disclosure: Narnolia Financial Advisors Ltd. is a SEBI registered Research Analyst having SEBI Registration No. INH300006500. The Company/Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past.

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.
Shabbir Kayyumi is the Head of Technical & Derivative Research at Narnolia Financial Advisors.
first published: Jan 18, 2021 11:53 am

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