Rohan Patil
After forming three continuous Doji candlestick patterns on the weekly charts, the benchmark index has broken a resistance shield and given a breakout above its previous swing high.
The Nifty continued to form another higher high formation on the daily chart and its major technical indicators remained positively poised above their averages.
On November 27, benchmark index traded in a narrow range throughout the day, but last hour buying forced the index to close at 12,100. Positive market breadth near its record high shows positive enthusiasm among traders.
On the derivative front, 12,100 strike Put holds maximum open interest addition of 13 lakh shares. In the recent rally, Call writers at 12,000 strikes were covering their short positions and creating fresh longs positions, which indicates that the bullish momentum is likely to continue.
The banking index has certainly outperformed the Nifty in the previous two trading sessions, which is majorly led by private sector banks.
The Lok Sabha on November 27 passed the Prohibition of Electronic Cigarettes Bill, 2019, creating optimism among cigarette manufacturing companies.
The current positive momentum can extend further, which could take the Nifty towards 12,300-12,350 levels. But the momentum oscillator RSI (14) on the daily chart has formed a bearish divergence, so stock selection will be a key in the current scenario.
As the market is inching higher there is up shift in support level, which is placed at 11,900 levels. A breach of the 11,900 mark will test the horizontal trend line support near 11,700 levels while Fibonacci projection suggests 12,300 will be the next resistance to watch out for.
Here is a list of top three stocks that could return 7-13 percent in the next three-to-four weeks:
Maruti Suzuki India: Buy| LTP: Rs 7294.40| Target: Rs 7,805|Stop Loss: Rs 7000| Upside 7%
Maruti Suzuki India on the daily chart has given a 3-week consolidation breakout and is ready to shift its gear on the higher side. The 50-Days exponential moving average is placed near 7000 odd levels and is acting as an anchor point for the prices.
On the weekly chart, the stock has recently completed its throwback from its previous swing low and stock is ready to unfold one wave higher.
The momentum indicator RSI (14) seems to done its pullback near 60 levels and currently has hooked up to gear a new momentum on the higher side. MACD clearly shows a positive trend and currently reading above the line of polarity.
Traders can accumulate the stock in the range of 7280 - 7315 for the target of 7805 with a stop loss below 7000 on a daily closing basis. Lux Industries: Buy| LTP: Rs.1396.95| Target: Rs 1535|Stop Loss: Rs 1310| Upside 10%
Lux Industries on the weekly chart has witnessed a Falling Wedge Pattern breakout at 1317 odd levels. Since May 2018, the stock is continuously trading in a lower high Lower low formation on 14 Nov 2019 prices have broken a resistance shield and gave breakout above its previous swing high, which is positive for the counter.
Prices are trading above all its major exponential moving averages (100 & 200) which have created an optimist scenario for the stock. Weekly 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 1385 - 1410 for the target of 1535, and a stop loss can be placed below 1310 on a daily closing basis. Motherson Sumi: Buy| LTP: Rs 133.60| Target: Rs 151.50| Stop Loss: Rs 124|Upside 13.10%
After a prolong correction MOTHERSUMI has witnessed breakout of “Falling Channel Pattern” on the weekly interval which is a bullish reversal in nature.
The stock is currently trading above its Horizontal Trendline support on the weekly timeline which is acting as an anchor point.
Since March 2018 weekly RSI (14) is reading in between a band of 30 & 50 levels, On November 2019 momentum indicator RSI (14) has given a range breakout above 50 which is positive Range Shift for the indicator & currently reading above 55 levels on the weekly chart.
MACD has just stretch above Zero line which is a line of polarity with positive crossover on the weekly chart. Moreover Counter is trading above 20, 50 & 100 EMA on the daily time scale, which is positive for the stock.
Traders can accumulate the stock in a range of 133 – 134.20 for the target of 151.50, and a stop loss can be placed below 124 on a daily closing basis.
(The author is Technical Analyst, Bonanza Portfolio Ltd)
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