Rohan Patil
The benchmark index on December 4 witnessed a sharp recovery of almost 100 points after hitting an intraday low at 11,935.30. The index defended 21-Days EMA once again on the daily chart and bounced back to close above 12,000 levels on the date.
The Nifty has formed a Bullish Piercing Pattern on the daily interval which suggests the end of the prior three days of correction.
A Bullish Piercing pattern is formed when prices make a sharp recovery from its low point and retrace almost seventy percent to prior days red candle.
The Nifty Bank has formed a Bullish Engulfing candlestick pattern on the daily timeline on December 4 and the current chart structure presumes that the banking index may outperform Nifty in the near-term.
On the derivative front, in call options, the highest change in open interest is witnessed which is around 12,100, and 12,000 levels.
While in Put options, the maximum change in open interest (OI) addition was witnessed in the 12,050 and 12,000 strikes. This option data suggest that call writers are liquidating their position while put writers are in charge, which is a positive sign for this week's expiry and indicate bullish momentum is likely to resume.
We assume that the short-lived correction is probably over and the benchmark index is ready for its next leg of impulse wave which will stretch Nifty to trade in unchartered territory.
As the market inch higher there is upshift in the support level which is placed at 11,900 levels, and a breach of the said level will retest horizontal trendline support near the 11,700 levels.
On the upside, Fibonacci projection suggests 12,300 will be the next resistance to watch out for.
Here is a list of top 3 stocks which could give 6-12 percent return in the next 3-4 weeks:
Century Textiles: Buy| LTP: Rs.473| Target: Rs 515.50| Stop Loss: Rs 449|Upside 9%
On the weekly charts, Century Textile has given a classical breakout above its horizontal trendline. The stock was in a consolidation mode for the past six months.
A recent breakout has pushed the price above its 50, 100 & 200-Days exponential moving averages on the weekly set up.
Momentum oscillator RSI (14) on a weekly and monthly chart is reading above 55 levels with positive crossover. MACD clearly shows a positive trend and is currently reading above the line of polarity.
Traders can accumulate the stock in the range of Rs 471 - 475 for the target of Rs 515.50, and a stop loss can be placed below Rs 449 on a daily closing basis.
Reliance Industries: Sell| LTP: Rs 1,552.70| Target: Rs 1,460|Stop Loss Rs 1,615| Downside 6%
After an overextended rally Reliance Industries on the daily chart has formed multiple bearish patterns which can drag prices lower to some extent.
The stock has formed a Bearish Crab Harmonic Pattern at around Rs 1,600 level and is currently trading well below its potential reversal zone (PRZ) level.
The momentum Oscillator RSI (14) on the daily chart has formed a Bearish Divergence which is above 70 levels and RSI has also breached its upward rising trendline which is formed by adjoining the low of 8th Aug 2019.
Based on the above technical set up profit booking at the current scenario cannot be ruled out. The stock may be sold in the range of Rs 1,556 - 1,547 for a target of Rs 1,460, and a stop loss can be placed above Rs 1,615.
Delta Corp: Buy| LTP: Rs 215.55| Target: Rs 241| Stop Loss: Rs 200| Upside 12%
A recent spurt in prices has scooped Delta Corp above its horizontal trendline resistance on the daily timeline.
A breakout was witnessed on November 27 and since then the prices were holding well above its support line.
A spurt in prices has made the stock settle above its 50 & 100-Days exponential moving averages on the weekly time frame, which is a positive sign for the stock.
Momentum oscillator RSI (14) has made itself settled in the range of 50 to 70, which is a bullish range shift for the indicator on the daily chart.
Traders can accumulate the stock in the range of Rs 214.50 - 217 for the target of Rs 241, and a stop loss can 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.
Disclaimer: Reliance Industries (RIL), is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments
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