Shabbir Kayyumi
The domestic market plunged in the week gone by following jittery global cues amid deepening fears of the adverse economic impact of coronavirus.
The index has formed a bearish candlestick pattern on a weekly time frame suggesting selling pressure on the higher side until the top of this pattern (9,550) is breached decisively. As India VIX is trading at 38, which is above its 10 DMA, we expect the market to be choppy and volatile in the near term. At the same time, weekly Heiken-Ashi Candle, the small body Doji pattern, suggests indecisive movement.
Nifty concluded the 'D' leg of ABCD harmonic pattern recently and it is retracing as a part of post pattern implications. However, lower Bollinger band placed at 8,920, previous swing low standing at 8,909 and Fibonacci 38.2 percent levels at 8,990 are making confluence zone of support near 8,900 mark.
A bounce back after taking this support is highly possible whereas breakout can come only on a decisive close above 50 DMA resting at 9,300 mark. Only a breakout above this level can take prices higher towards previous swing high placed at 9,880 mark. While breaking down below 8,900 will trigger fresh selling and that can push Nifty towards 8,500 mark.
Banking Index consolidated in a tight range of mere 1,500 points (20,000-18,500) throughout the last week. Flat Bollinger Band on the daily timeframe suggests that sideways movement may continue till we see fresh price action on either side.
Here is the list of three stocks which could return 14-16 percent in the short term:
Jindal Steel & Power: Buy Around Rs 93 | Target: Rs 108 | Stop Loss: Rs 83 | Upside: 16 percent
In the last few weeks, this counter has been moving in well defined ascending channel with multiple touchpoints and appears to be having strong support around Rs 83-85 levels as it bounced back a couple of times form these levels.
Hence, if the stock sustains above this support then a decent target of Rs 108 cannot be ruled out over a given period of time. Therefore, the investor should accumulate this scrip around Rs 93 with a suggested a stop loss of Rs 83 for the upside target of Rs 108.
ICICI Prudential Life Insurance Company: Buy Around Rs 380 | Target: Rs 440 | Stop Loss: Rs 338 | Upside: 15 percent
The stock has ended its corrective mode on higher time frame while prices are now coming out of the recent correction phase which is a positive sign for the bulls. Ascending triangle breakout on the weekly chart indicates strength in trend and we believe it is an opportune moment to go long on the stock. We suggest accumulating stock around Rs 380 with a stop loss of Rs 338 for the target of Rs 440.
HDFC Bank: Buy Around Rs 880 | Target: Rs 1,005 | Stop Loss: Rs 810 | Upside: 14 percent
The stock witnessed sustained sell-off over the past few days, however, the strong demand zone around Rs 870-880 zone which has emerged as the support for the same. On a weekly chart, the line of polarity suggests a strong base until this break decisively. Formation of a Doji candle on the weekly chart indicates the consistency of positive rhythm in the stock. We expect the stock to perform going ahead and recommend buying around Rs 880 with a stop loss of Rs 810 for the target of Rs 1,005.
The author is Head of Technical Research at Narnolia Financial Advisors.
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