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Hot Stocks | Godrej Consumer Products, Torrent Pharma, IIFL Finance can give up to 14% return in short term

Torrent Pharma has broken out from the bullish “Flag” pattern on the daily chart. After four sessions of running correction, it has resumed its uptrend. Stock price has surpassed the previous swing high resistance of Rs 2,918.

July 05, 2022 / 07:20 AM IST
 
 
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Vinay Rajani, CMT, Senior Technical & Derivative Analyst at HDFC Securities

On July 4, Nifty broke out from the bullish “Flag” pattern on the daily chart. Nifty closed above its 20 day moving average for the first time after June 9, 2022. Bank Nifty formed second consecutive higher top and higher bottom formation on the daily chart and also surpassed 20 DMA hurdle on closing basis.

In case of a number of stocks above 200 DMA, in the Multicap Index NSE500 this number reached 14 percent last month, which is extreme oversold levels looking at history. In such a scenario, we can expect the market to rise in the current month of July.

At the beginning of the July series, the ratio of their long to short positions is 0.17. This should keep bears on the tenterhooks.

Looking at the data of last 29 years, we find that the month of July has an average return of 1.76 percent for Sensex, which happens to be the second best after December. Of these 29 years, July has closed with monthly gains in 20 out of the 29 instances under study. This translates into a 69 percent chance of a positive return in this month of July 2022. The important thing to know is that, this time in year 2022, previous 3 months of April, May and June showed back to back negative returns in Sensex, which has happened for the first time in 29 years. So this increases the probability of July month performing on the flip side.

Close

We see that oscillators are quite oversold and markets are poised for a short covering bounce. All long bets should be relinquished below that key support of 15,500. The level of 16,500 is the temporary roof for the markets. Do lighten your long commitments if Nifty were to come near those levels in July.

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

Godrej Consumer Products: Buy | LTP: Rs 813 | Stop-Loss: Rs 750 | Targets: Rs 880-930 | Return: 8-14 percent

The stock has broken out from bullish Inverted Head and Shoulders pattern on the daily line chart. Price breakout is accompanied with rising volumes. Stock is trading above its 20 and 50 day EMA (exponential moving average). The stock price has also broken out from the downward sloping trend line on the weekly chart.

We have seen higher top and higher bottom formation on the daily chart. FMCG sector has started outperforming. Indicators and oscillators have turned bullish on daily and weekly charts.

The stock can be bought in two tranches, one at current market price and second at Rs 770, for targets of Rs 880 and Rs 930 while keeping a stoploss at Rs 750.

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IIFL Finance: Buy | LTP: Rs 337.45 | Stop-Loss: Rs 317 | Targets: Rs 360-380 | Return: 7-13 percent

The stock price has broken out from consolidation with rising volumes. It has surpassed 50 day EMA resistance. Indicators and oscillators have turned bullish on the daily chart.

Primary trend of the stock has been bullish with higher tops and higher bottoms on weekly charts. Stock can be bought in two tranches, one at current market price and second at Rs 325 for targets of Rs 360 and Rs 380 while keeping a stop-loss at Rs 317.

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Torrent Pharma: Buy | LTP: Rs 2,904 | Stop-Loss: Rs 2,750 | Targets: Rs 3,100-3,240 | Return: 7-12 percent

The stock has broken out from the bullish “Flag” pattern on the daily chart. After four sessions of running correction, it has resumed its uptrend. Stock price has surpassed the previous swing high resistance of Rs 2,918.

It is trading above its 20, 50 and 200 DMA. Primary trend of the stock is bullish with higher tops and higher bottoms on the weekly chart.

Plus DI (directional indicator) has crossed -DI on the upside on daily charts, which indicates short term trend reversal.

The stock can be bought in two tranches, one at current market price and second at Rs 2,800 for targets of Rs 3,100 and Rs 3,240, while keeping a stop-loss at Rs 2,750.

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Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Vinay Rajani is the Senior Technical & Derivative Analyst at HDFC Securities.
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