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Hot Stocks | Aurobindo Pharma, Cummins India, LIC Housing Finance can give up to 12% return in short-term

Nifty registered a high above its previous double top resistance which indicates the continuation of higher high higher bottom formation on the daily timeframe.

August 20, 2020 / 07:50 AM IST
 
 
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Rohan Patil

Indian bourses on August 19 witnessed a half a percent gap up opening and traded above 11,400 for the majority of time throughout the day.

The market breadth also remained in favour of bulls. For every single loser, there were more than two gainers.

Nifty registered a high above its previous double top resistance. A high above a double top pattern indicates the continuation of a higher high higher bottom formation on the daily timeframe.

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For the past few months, the benchmark index is trading in a rising channel formation and within that period prices have respected its lower band of the channel almost four times and successfully rallied higher.

India VIX continues to drift lower below its four-month low and witnessed a breakdown of its smaller degree trendline on a daily interval.

Both, Nifty Private Bank and PSU Banking indices are underperforming Nifty, which indicates the overall weakness in banking space.

The breakdown below 21,000 could trigger a further supply.

On February 28, Nifty witnessed a sharp gap down opening and left an unfilled gap near 11,500 level.

A decisively break above 11,500 level will open the range for 11,800 level which is the resistance of the upper band of the rising channel pattern. Support for Nifty is coming near the 11,150 -11,100 zone.

Here are three buy calls for the next 2-3 weeks:

Aurobindo Pharma | Buy | LTP: Rs 864 | Target price: Rs 965 | Stop loss: Rs 800 | Upside: 12%

The coronavirus pandemic seems to have proved to be a boon for the pharma space.

Aurobindo Pharma has logged hefty gains in the last four months.

Price-wise, we can see a decisive breakout happening from the recent congestion zone along with sizable volumes, providing credence to the move.

Nifty Pharma index is currently settled above all its major exponential moving averages (50,100 and 200) and has been outperforming Nifty for the last four months which is visible on the Relative Strength (RS) indicator on a month-on-month basis.

The stock is forming a bullish higher tops higher bottom on the weekly chart. +DI is placed above the –DI while the ADX line is placed above 60 levels, indicating a bullish setup for the stock.

Traders can accumulate the stock in the range of Rs 862 - 866 for the target of Rs 965.

Cummins India | Buy | LTP: Rs 462.50 | Target price: Rs 510 | Stop loss: Rs 430 | Upside: 10%

On the daily chart, Cummins India has given a breakout of the consolidation pattern. A bullish candle formed on a weekly timeframe is above its previous several weeks high.

Since the breakout, the stock has taken a breather for a couple of days and has witnessed a throwback near its trendline support.

The recent up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.

The stock is placed above all important moving averages, indicating a bullish trend.

The majority of indicators and oscillators are showing a positive trend for the current scenario.

Traders can accumulate the stock in the range of Rs 460 – 463.50 for the target of Rs 510.

LIC Housing Finance | Buy | LTP: Rs 278.30 | Target price: Rs 298 | Stop loss: Rs 265 | Upside: 7%

On August 19, the stock managed to surpass the multiple resistance zones around Rs 270 –273, which eventually confirmed a triangle pattern breakout on the daily interval.

The recent up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.

Prices are trading above 21 and 50-day exponential moving averages on the daily chart.

Momentum oscillator RSI (14) is reading above 60 levels with positive crossover, which is positive for the counter.

The MACD indicator is reading above the line of polarity with positive sentiments.

Traders can accumulate the stock in the range of Rs 276 – 278.50 for the target of Rs 298.

(The author is Technical Analyst at Bonanza Portfolio)

Disclaimer: The views and investment tips expressed by investment experts 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.
Rohan Patil
first published: Aug 20, 2020 07:16 am
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