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Last Updated : May 24, 2019 03:24 PM IST | Source: Moneycontrol.com

Golden Cross | Midcap and small cap indices are set for fresh bull trend, says ICICI Direct

ICICI Direct said investors should focus on building a portfolio of quality cyclical stocks to ride the rally as since inception, “Golden Cross” on the Nifty Midcap, small cap have produced a minimum return of 29 percent and 37 percent, respectively, in the following year.

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Nifty midcap and small-cap indices are witnessing the Golden Cross phenomenon, indicating a bullish shift in trend direction, along with the maturity of 14-month corrective phase on Nifty Midcap index, noted ICICI Direct.

The brokerage said the twin developments are making them confident of reinforcing their positive stance on broader markets.

"We expect midcap and smallcap indices to embark upon a fresh bull trend with significant upsides and outperform the benchmarks over coming months," said the brokerage.

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ICICI Direct said investors should focus on building a portfolio of quality cyclical stocks to ride the rally as since inception, “Golden Cross” on the Nifty Midcap, small cap have produced a minimum return of 29 percent and 37 percent, respectively, in the following year.

Also, bottom-up analysis of both indices underscores bullish set up for 70 percent and 77 percent constituents.

In technical parlance, the Golden Cross is a phenomenon when a medium-term moving average (50-day) crosses above the longer-term moving average (200-day). As long-term indicators carry more weight, the Golden Cross represents a major shift in momentum from bears to bulls and a bull market on the horizon.

Following stocks are the top picks for ICICI Direct for the next six months:

Bharat Electronics | Buying Range: Rs 96-102 | Target: Rs 115 | Stop Loss: Rs 90 | Upside: 16 percent | Breakout from a six-month basing pattern formed at key support. The stock price has seen emerging above 52-week EMA (Rs 99) for the first time since February 2018 validating change of guard from bear to bull. ICICI expects a target of Rs 115, where the current up move from May low of Rs 85 will equate February–March rally (Rs 72-102).

Bank of India | Buying Range: Rs 84-90 | Target: Rs 101 | Stop Loss: Rs 79 | Upside: 16 percent | First higher high-low on weekly after six weeks decline. Stock price placed near key support of Rs 80 which has been held on four occasions over past one year, thus offering favourable risk-reward set-up. ICICI expects the share price to rally towards Rs 102, which is 80 percent retracement of past six-week decline (Rs 108-79)

JK Lakshmi Cement | Buying Range: Rs 360-380 | Target: Rs 430 | Stop Loss: Rs 335 | Upside: 16 percent | Strongest rally since May 2017 peak leads to falling channel breakout and sustaining above the same. Faster retracement of past four-week decline indicates a resumption of an uptrend. ICICI expects the stock to resolve higher towards Rs 430, which is 80 percent retracement of March – November 2018 decline (Rs 487-260).

Kajaria Ceramics | Buying Range: Rs 595-615 | Target: Rs 745 | Stop Loss: Rs 745 | Upside: 23 percent | The entire up move since October 2018 is well-channelled signalling sustained buying at elevated levels. The stock has recently rebounded taking support at the 52 weeks EMA. The stock is likely to head towards Rs 750 as it is the 161.8 percent extension of the previous up move (Rs 496-635) from the recent trough of Rs 543 signals upside towards Rs 750.

PNC Infratech | Buying Range: Rs 167-174 | Target: Rs 205 | Stop Loss: Rs 151 | Upside: 21 percent | The stock has given a resolute breakout from triple bottom bullish reversal pattern indicating fresh upsides. The base of the triple bottom is placed at the 200 weeks EMA and MACD giving a buy signal. ICICI expects the stock to continue its current up move and test Rs 205 levels as it the 80 percent retirement of the entire decline (Rs 228-123).

Disclaimer: The views and investment tips expressed by the broking houses on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on May 24, 2019 03:24 pm
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