Shabbir Kayyumi Narnolia Financial Advisors
Market witnessed sell-off in the last hour of trade on last Friday and closed below 200-day moving average and closed six-month low. Crude oil woes and depreciation in Indian currency weighed on market sentiment.
Majority of the stocks closed in negative and almost near low of the week because of back to back negative macro factors. Trading volume too has spiked lately suggesting sharp unwinding of margin trading positions.
India VIX is trading at highest level of the week around 19.73 and gained almost 10 percent in last week along with fall of prices implies higher volatility in market with bearish bias. Interestingly India VIX is making higher high almost from last 6 weeks, and it is having resistance around 20 mark which was reversal point earlier too.
Nifty has closed below all short-term moving averages, 5-DMA (10,742), 20-DMA (11,151) and 50-DMA (11,321) and 200-DMA (10,780) suggesting strong bear grip on the market. But strong upward sloping trend line on weekly time frame and previous swing lows and highs around 10,100-9,950 levels are likely to provide support to prices.
On the other side, 200-DMA now will act as resistance to the market; also importantly, 200-DMA is in the middle of the price gap of 10,821-10,754 that occurred on October 4. Only positive for the market is that it has gotten so away from important averages that some corrective bounce may happen anytime.
We maintain cautious view in this sharply down trending market till some consolidation starts.
Bank Nifty
Selling pressure was witnessed in banking sector previous week and Bank Nifty traded lower and made a low of 24,250 and closed around 24,443 levels. We expect bearish to rangebound movement for coming sessions in a range of 24,800-23,700.
Here is the list of five stocks which could give 6-19 percent return in short term:
SBI: Buy | Buy Around: Rs 254 | Target: Rs 302 | Stop Loss: Rs 231 | Upside: 19%
Stock find support near its key support area of Rs 250-254 levels, near its previous swing bottom from where reversal can be expected in the coming sessions.
Positive crossover in MACD giving cues to take long position in the scrip. Buying momentum of acceleration will take place above Rs 270 levels where 200 DMA is seen. Buy SBI at Rs 254 with stop loss of Rs 231 and for the target of Rs 302 levels.
Sun Pharma: Buy | Buy Around: Rs 585 | Target: Rs 652.5 | Stop Loss: Rs 550| Upside: 11.5%
After hitting the peak of Rs 679, stock slipped near the low of Rs 591 from where chances of developing of demand is higher and it has been trading in a rangebound zone of Rs 620 and Rs 590 mark.
As of now, point of polarity is giving cues to accumulate this stock at lower levels. The RSI and other indicator also have been hovering near their oversold zone and currently it has indicated a steep rise.
As long as it sustains above Rs 550, possibility of moving to Rs 652.5 is higher.
Torrent Power: Buy | Buy Around: Rs 233| Target: Rs 258.50 | Stop Loss: Rs 210| Upside: 11%
Prices of stock has seen a sharp rebound after hitting a low of Rs 211 where its key support is seen. The emergence of Inverted Head and Shoulder on the lower time frame of chart is giving the possibility of pullback at higher side in coming sessions.
Moreover, positive RSI on daily supports bullish bias in the stock. Strong support is seen near Rs 211-212 levels. Buy above Rs 233 with stop loss of Rs 210 and targets of Rs 258.5 levels.
Apollo Hospitals: Buy | Buy Around: Rs 1,057 | Target: Rs 1,126 | Stop Loss: Rs 1,024| Upside: 6%
The stock has witnessed a decent correction recently from the peak of Rs 1,234 and recently scrip took support from its upward sloping line which gives buying opportunity.
RSI too bottomed out near its oversold zone and has indicated a reversal to maintain a positive bias. It has the potential to rise further in the coming days.
Stochastic is also looking firm lending support to price action. Inverted H&S of hourly chart breakout is expected above Rs 1,075 from where the momentum of buying will increase.
With the chart looking attractive and decent volume participation witnessed, we recommend a buy on dip around Rs 1,057 in this stock for an upside target of Rs 1,126, keep a stop loss of Rs 1,024.
Nestle India: Buy | Buy Around: Rs 9400 | Target: Rs 10,000 | Stop Loss: Rs 9,198 | Upside 6%
Scrip gave sharp decline towards Rs 9,113 after giving high of Rs 11,705 levels. Principal of polarity suggest support at lower levels from where buying momentum can be expected.
Daily time frame is taking support from its 200 DMA. Further upsurge is expected to come once when it will give decisively close above 9,700 levels.
Moreover, Bullish crossover in MACD suggests positivity in the counter. We suggest buying Nestle India around Rs 9,400 with stop loss of Rs 9,198 and for the target of Rs 10,000.
Disclaimer: The author is Head - Technical & Derivative Research at Narnolia Financial Advisors. 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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