Indian Benchmark index continued to decline gradually post a depressive start for the week. The Nifty50 closed at 11,678, down 119 points on Wednesday.
On February 4, 2020, Nifty witnessed a gap-up opening and the gap was left unfilled around 11,765-odd levels. Indian bourses on February 26 again witnessed a gap-down opening and filled the left gap of February 4th and formed a Rounding Top formation on the daily charts.
The Nifty50 also closed below its 200-Day exponential moving average (EMA). Previously, on October 4, 2019, the index closed below its 200-Day EMA and witnessed a sharp bounce back thereafter.
The Nifty pack on the daily chart has given a breakdown from its upward rising trend line which was drawn by joining the immediate lows of October 9, 2019 and Feb 3, 2020.
On the other hand, Bank Nifty has taken support near its 200-Day Exponential Moving Average which is placed at 30,100 level and closed above the said EMA.
On the lower timeframe, major technical indicators oscillated around their respective oversold zones. Though our view will remain bearish, the near-term pullback or sideways movement cannot be ruled out before the index resumes its southward journey.
On the lower side, the Nifty50 will find major supports in the range of 11,513 – 11,442 which is supported by the Fibonacci ratio. In the case of a rebound, the Nifty will face hurdles in the range of 12,000 level.
Here is a list of top three stocks which could give 11-14% return in the next 3-4 weeks:
Deepak Nitrite: Buy| LTP: Rs.502| Target: Rs 557| Stop Loss: Rs.476| Upside 11%
Despite the overall bearish sentiments, Deepak Nitrite continues to outperform the benchmark index on a relative basis. The stock continuous to trade in a higher high, and higher low formation.
Currently, prices are sailing above all its major exponential moving averages on the weekly interval, which is positive for the stock.
The momentum Oscillator RSI (14) is gearing higher above 70 levels with positive crossover indicating strong positive momentum likely to continue.
Traders can accumulate the stock in the range of Rs 504-508.50 for the target of 557, and a stop loss can be placed below Rs 476 on a daily closing basis.
Garware Technical Fibres: Buy| LTP: Rs.1647| Target: Rs 1890|Stop Loss Rs.1440|Upside 14%
On the daily chart, Garware has witnessed a rectangle pattern breakout and is currently looking strong to trade in uncharted territory.
Currently, the prices are sailing above all its major exponential moving averages on the daily charts, which is positive for the stock.
On the daily frame, momentum oscillator RSI (14) is currently reading above 60 levels with positive crossover.
After a broad base consolidation, Wednesday’s spurt in prices has given horizontal trendline breakout and the MACD indicator is nicely poised above its averages on a weekly and daily time frame.
Traders can accumulate the stock in the range of Rs 1,635 – 1,655 for the target of 1,890, and a stop loss can be placed below Rs 1,440 on a daily closing basis.
Tube Investments of India: Buy| LTP: Rs.551| Target: Rs 620|Stop Loss Rs.520|Upsdie 12%
After a prolonged consolidation, Tube Investment has witnessed a breakout from the Triangle Pattern on the daily time frame which is placed around 544.50 levels.
A current spurt in prices has witnessed a follow-up buying in the stock. A strong reversal in Momentum oscillator RSI (14) from 40 level has set up a strong base for the stock which is currently reading above 60 levels with positive crossover on the daily horizon.
On the broader time frame, the stock has witnessed a Pennant Pattern breakout. Pennant pattern normally acts as a continuation of a prevailing trend.
Traders can accumulate the stock in the range of 552 - 557 for the target of 620, and a stop loss can be placed below 520 on a daily closing basis.
(The author is Technical Analyst, Bonanza Portfolio Ltd)Disclaimer:
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