Rohan Patil
The benchmark index has formed a Small Rounding Bottom pattern on the daily chart, and the base for that got created near 11,800 levels. The Nifty sustained its gap-up opening on November 20 but witnessed mild profit booking on an intraday trading basis.
In the last few sessions, we saw cooling off in the Nifty as it went through some consolidation phase as well. But, the gap-up opening of November 20 looks encouraging now as it managed to give a convincing close beyond its previous seven days candle on a daily basis with slightly average volume.
In the derivatives front, put writing was seen at 11,800-11,700 strike prices, indicating Nifty is likely to find strong support in the 11,700-11,800 range.
Unless Nifty closes below it, the trend would be considered bullish for the markets from the derivative side. On the higher side, call writing was seen at 12,000 levels.
The Nifty Metal and Pharma index is well poised for a new rally which can be visible on the weekly chart. State-run banks are a major centre of attraction since the past couple of trading sessions and current chart formation suggests that investors should hold on to their bullish positions with trailing stop loss.
The Nifty Bank, on the other hand, is showing continuous outperformance against benchmark Nifty.
In case of any decline, the index will continue to find support around 11,800-11,700 levels, which coincides with horizontal trendline supports and will act as a line of polarity (resistance will act as support).
However, a stable move above 12,050 levels will invalidate resistance and strengthen the index to record new life-time-high until 12,300 odd levels.
Here is a list of top three stocks which could give 7-12% in the next 3-4 weeks:
Canara Bank: Buy| LTP: Rs 221.95| Target: Rs 238.50| Stop Loss: Rs 213| Upside 7.50%
PSU banking index is currently outperforming the Bank Nifty. After a recent consolidation Canara Bank witnessed a breakout from the Inverted Head & Shoulder Pattern on a daily timeline.
Currently, prices are trading above its neckline support which is positive for the counter. The stock is trading above its 20, 50, 100-Days exponential moving averages (EMA), which is a bullish sign for the prices.
On the weekly interval, prices have retested its trendline support of a falling wedge pattern and sudden reversal was witnessed in prices. The Daily RSI (14) has shifted above 60 levels with positive crossovers, which is positive for the stock.
Traders can accumulate the stock in a range of Rs 221-223 for the target of Rs 238.50, and a stop loss could be placed below Rs 213 on a daily closing basis.
Torrent Pharma: Buy| LTP: Rs 1,742.20| Target: Rs 1,890 |Stop Loss: Rs 1,655| Upside 9%
The current throwback in Torrent Pharma has given investors an opportunity to buy near its trendline support. The stock has broken out from the Falling Trendline on the weekly charts a couple of weeks ago by closing above the resistance level of Rs 1,700 level.
Oscillators and momentum Indicators like RSI and MACD are showing strength in the stock on the weekly charts.
The stock is trading above its 20, 50, and 100-Days Exponential Moving Averages (EMA) on the weekly interval which is a bullish sign for the prices.
Traders can accumulate the stock in the range of Rs 1,732 – 1,750 for the target of Rs 1,890, and a stop loss could be placed below Rs 1,655 on a daily closing basis.
Aditya Birla Fashion & Retail: Buy| LTP: Rs 216.05| Target: Rs 242 | Stop Loss: Rs 200| Upside 12%
Aditya Birla Fashion & Retail has witnessed a breakout in prices after seven weeks of consolidation and currently sustaining above its horizontal trendline on a weekly interval.
Currently, prices are sailing above all its major exponential moving averages (100 & 200 EMA), which is extremely positive for the prices.
Monthly price action surely suggests prices are getting ready for uninterrupted rally as prices are moving ahead out consolidation range.
The momentum indicator RSI (14) has witnessed a bounce back from 40 levels and currently reading above 55 marks with positive crossover.
Traders can accumulate the stock in the range of Rs 214.50 – 217.50 for the target of Rs 242, and a stop loss could be placed below Rs 200 on a daily closing basis.
The author is Technical Analyst, Bonanza Portfolio
Disclaimer: The views and investment tips expressed by investment experts 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
