After a few weeks of consolidation, the Indian markets have started the week on a strong note led by positive global cues. The Nifty showed strength from the start of November 25's trade and ended higher by 1.3 percent at 12,074 levels.
The BSE Midcap and Smallcap indices gained 1.2 percent and 0.8 percent, respectively, yet underperformed the market on November 25. Healthy buying was witnessed across sectors. Notably, telecom, metal and realty were the stars in trade on November 25, gaining between two percent and 6.8 percent, respectively.
Going forward, on the domestic front, PMI manufacturing and Q2 GDP data (scheduled this week) are likely to provide direction to the market. Globally, increasing optimism for a favourable outcome of the US-China trade deal is likely to keep sentiment positive in the short term.
Given that the markets are near an all-time highs, some consolidation may be witnessed. The market may witness volatile swings this week due to scheduled derivatives expiry on November 28.
On the data front, investors will be eyeing core sector data and GDP data on November 29. Besides, US-China trade deal will also be closely watched by participants.
The sharp surge seen on November 25 -- the first day of expiry week -- has negated the possibility of profit taking and indications are now in favour of the up move to continue.
Earlier, it was banking that was single-handedly pushing the benchmark higher, but now auto, FMCG, metal, and pharma are also looking upbeat. We advise traders to maintain a bullish view on the market and suggest focusing more on stock selection and trade management.
Here is a list of top three stocks that could return five to seven percent in the next three-to-four weeks:
Bank of Baroda: Buy| Target: Rs 107| Stop loss: Rs 98 | Upside 5.9%
Bank of Baroda has formed a bullish reversal pattern after three months of consolidation and is trading closer to the breakout area of the same.
Interestingly, the PSU banking index has also formed an identical pattern and pointing towards a sharp surge ahead.
Besides, the bullish divergence between the price chart and RSI oscillator is further strengthening the possibility of short term reversal. We thus suggest traders accumulate fresh longs within 99-101. It closed at Rs 100.55 on November 25, 2019.
Dabur India Ltd: Buy| Target: Rs 495| Stop-Loss: Rs 454| Upside 5.3%
Dabur India has been consolidation in a range for the last two weeks after retesting the record high. We feel it is a healthy pause after the sharp rise which has resulted in the formation of a fresh buying pivot.
We advise traders to create fresh longs in the range of Rs 466-470. The stock closed at Rs 469 on November 25, 2019.
L&T Finance Holdings Ltd: Buy|Target: Rs 112| Stop-Loss: Rs 99|Upside 7.7%
L&T Finance has surged strongly on November 25 and witnessed a breakout from a bullish reversal (Inverted Head and Shoulder) pattern.
It has also surpassed the critical hurdle of moving average i.e. (100 EMA) on the daily chart, supported with an exceptional rise in volume, which is adding to the confirmation.
We advise traders to initiate fresh longs as per the mentioned levels of Rs 102-104. It closed at Rs 104 on November 25, 2019.
(The author is VP Research, Religare Broking)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.