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Last Updated : May 21, 2020 07:56 AM IST | Source: Moneycontrol.com

Hot Stocks | India Cements may give up to 21% return in short term

In the case of decline, Nifty will find support around 8,800 and then 8,500. On the higher side, the index will face an initial hurdle around its 50 days EMA placed around 9,450 level.

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Rohan Patil

Benchmark index Nifty saw rising wedge pattern breakdown on the daily chart on May 15 and the rally we witnessed on May 20 can be considered as a pullback of the bearish setup.

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Nifty settled below its extended lower band of the rising wedge pattern for the fourth straight trading session, trading below its short term 21-day EMA on the daily interval.

Its major technical indicators remained in sell mode and overall market breadth too remained negative for the past couple of days.

For the last two trading sessions, Nifty continued to trade within a range of May 18 candles. This set up in Nifty gives a clue of a pullback rally in index.

We believe the index will remain under pressure as major indicators are in the favour of bears.

In the case of decline, Nifty will find support around 8,800 and then 8,500. On the higher side, the index will face an initial hurdle around its 50 days EMA placed around 9,450 level.

As the market volatility is on the higher side, one should stick to hedge strategy in the future and options trade.

Bank Nifty, too, has witnessed bearish head & shoulder pattern breakdown and the index is currently stained below its neckline resistance on a daily scale.

The underperformance of the banking index is easily visible on the Relative Strength (RS) indicator. For the past few trading session, a gap up opening in Nifty is getting hit by selling in the banking index.

Here are three stock recommendations for the next 3-4 weeks.

India Cements | Buy | LTP: Rs 118.15 | Target price: Rs 143 | Stop loss: Rs 103 | Upside: 21%

After a prolonged consolidation, India Cements has witnessed a range breakout on the daily and weekly time frame.

Currently, prices are trading above its trend line support and are looking to accelerate higher on the weekly chart.

Momentum oscillator RSI (14) is reading above 60 levels on the daily chart with positive crossover.

However, for the last few days, prices have been consolidating between its 100 and 200-day exponential moving average that is placed at Rs 99 and Rs 109, respectively.

In the current week, the stock has broken its moving average range on the higher side, which is positive for the counter.

Traders can accumulate the stock in the range of Rs 117 – 118.30 for the target of Rs 143 with a stop loss below Rs 103 on a daily closing basis.

Escorts | Buy | LTP: Rs 875.15 | Target price: Rs 945 | Stop loss: Rs 820 | Upside: 8%

Price on the daily chart has witnessed the breakout of a Horizontal trend line and is trading above its support.

After four days of consolidation, prices have scooped out of a trading range and are looking stronger to accelerate higher.

Currently, the stock is trading above its trend line support and is sustaining above its 21 & 50 days EMA on the daily interval.

The relative strength of the stock has been significantly higher as compared to Nifty for the last couple of weeks.

Weekly RSI (14) and MACD have reached above their previous peaks and are showing strength in the trend.

Traders can accumulate the stock in a range of Rs 864 - 871 for the target of Rs 945 with a stop loss below Rs 820 on a daily closing basis.

InterGlobe Aviation (IndiGo) | Sell | LTP: Rs 910.90 | Target price: Rs 850 | Stop loss: Rs 950 | Downside: 7%

IndiGo, on the daily chart, has given symmetrical triangle breakdown and is sustaining below its trendline resistance.

The counter has been continuously trading in a lower low lower high formation for the last 18 months and is sustaining its negative trend on all time frames.

The stock has drifted below its 50 & 100-day exponential moving average (EMA) on the weekly time frame, which indicates bears are in full control to push price lower.

The counter is likely to underperform the benchmark index which is visible on the Relative Strength (RS) indicator on a weekly interval.

Traders can short the stock in the range of Rs 907 -915 for the target of Rs 850 with a stop loss above Rs 950 on a daily closing basis.

(The author is Technical Analyst at Bonanza Portfolio)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​

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First Published on May 21, 2020 07:29 am
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