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Last Updated : May 23, 2019 09:54 AM IST | Source: Moneycontrol.com

Here's why PI Industries and Manappuram Finance are among Sanctum's top 4 picks

India VIX jumped 8.3 percent to close at 25.65. We expect volatility to continue in the market this week with election results on May 23

Ashish Chaturmohta
 
 
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After May 20 rally, the Nifty followed through with a gap-up opening to hit a new all-time high of 11,883.55 in the opening trade but failed to sustain the momentum at higher levels as profit booking set in that continued through the day.

The Nifty finally closed at 11,709 down by a percent on may 21. The broader market indices outperformed the benchmark with BSE Midcap and Smallcap losing 0.9 percent and 0.6 percent, respectively.

On the technical charts, the Nifty has formed a Bearish Dark Cloud, a two-day candle pattern after retracing majority of the previous day’s candle body.

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On the downside, if the index trades below 11,680, the Nifty could slip towards 11,591 and 11,426. On the upside, the index needs to sustain above 11,883 for a rally towards 12,000 and then 12,300.

India VIX jumped 8.3 percent to close at 25.65. We expect volatility to continue in the market this week with election results on May 23.

Here are four stocks that could give 10-16 percent returns in the next 3-4 weeks:

Larsen & Toubro: Buy| LTP: Rs 1,449| Stop loss: Rs 1,390| Target: Rs 1,600| Upside: 10 percent

After hitting an all-time high of Rs 1,470 in February last year, the stock has been trading sideways in the range of Rs 1,470-1,182. In the later part of the consolidation, the stock has been forming higher lows indicating buying at higher levels.

After last week’s long shadow hammer candle, the stock has seen a gap-up opening this week and long bullish candle. The price has given a breakout on the upside from the Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on daily and weekly charts.

Hence, the stock is likely to see a breakout on the upside from the consolidation zone. Thus, the stock can be bought at current levels and on dips towards Rs 1,425 with a stop loss below Rs 1,390 and a target of Rs 1,600.

State Bank of India: Buy| LTP: Rs 338| Stop loss: Rs 320| Target: Rs 390| Upside: 15 percent

The stock has seen a major long-term consolidation between Rs 150 and Rs 350 for more than eight years and is trading below the breakout level.

Also, over the last two-and-half years, the stock has consolidated between Rs 230 and Rs 350. In the last couple of weeks, the stock rallied from a low of Rs 292 on good volumes indicating buying participation in the stock.

The Average Directional Index (ADX) line, the indicator of the strength in the ongoing trend, has moved above the equilibrium level of 20 on the daily chart.

Hence, the stock is likely to see a breakout on the upside from the ongoing consolidation. The price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on daily and weekly charts.

Thus, the stock can be bought at current levels and on dips towards Rs 332 with a stop loss below Rs 320 and a target of Rs 390.

PI Industries: Buy| LTP: Rs 1,120| Stop loss: Rs 1,065| Target: Rs 1,300| Upside: 16 percent

The stock after hitting a high of Rs 1,034 in January last year corrected to about Rs 675 in October. Then it rallied towards Rs 1,089 and formed a bottoming out pattern over 15-month period.

For the last couple of months, the stock was trading in a range of Rs 1,090 and Rs 990. Last week, it has given a breakout after consolidating around all-time highs.

Above average volumes with positive price action in the past week indicate buying participation in the stock. MACD line has given a positive crossover with its average after turning up from the equilibrium level of zero on the daily chart.

Thus, the stock can be bought at current levels and on dips towards Rs 1,105 with a stop loss below Rs 1,065 and a target of Rs 1,300.

Manappuram Finance: Buy| LTP: Rs 126| Stop loss: Rs 120| Target: Rs 145| Upside: 15 percent

After touching an all-time high of Rs 130 in May last year, the stock corrected down to Rs 66 in October. Since then, it has been in an uptrend forming higher highs and higher lows.

The recent correction in the stock has taken support at 89-day exponential moving average and bounced back. The rally in the last one-week has been on good volumes indicating buying participation in the stock.

The price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on the daily chart.

MACD line has given a positive crossover with its average and moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 124 with a stop loss below Rs 120 and a target of Rs 145.

The author is Head of Technical and Derivatives, Sanctum Wealth Management.

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.

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First Published on May 22, 2019 02:09 pm
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