After testing record highs in November 26 session, the Nifty slipped back into the red and ended the day in the negative on the back of profit booking at higher levels. However, the index managed to close above 12,000 levels, which should now act as immediate support in coming sessions.
On the derivative front as well, 12,000 strike Put holds maximum open interest of more than 46 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.
On the technical front as well, the Nifty has given a decisive move above 12,000 levels after consolidating for more than two weeks in the 11,800-12,000 range.
The consolidation breakout hints at more price upsides in coming sessions towards 12,150-12,200 levels.
However, volatility is likely to grip the market this week as we approach the end of the November series expiry, given the fact that we are trading near record highs.
Here is a list of top three stocks that could return 8-10 percent in the next three-to-four weeks:
Dr. Reddy's Laboratories Ltd: Buy| Target: Rs 3200| Stop Loss: Rs 2800| Upside 8%
The stock has been maintaining its uptrend and is trading in a rising channel on the daily as well as on the weekly interval. At the current juncture, the stock has formed an inverted head and shoulder pattern on the daily charts and also managed to give a breakout above the neckline of the pattern formation.
From the derivative front as well, we have observed a long buildup into the prices with marginally higher volumes which suggest for more upside in the coming sessions.
Traders can accumulate the stock in the range of Rs 2,950-2,965 for the upside target of Rs 3,200 levels with stop loss below Rs 2,800.Carborundum Universal Ltd: Buy| Target: Rs 352| Stop Loss: Rs 300| Upside 10%
Since long, the stock has been trading well below its short and long-term moving averages and tested lows of Rs 265 levels in late August’19.
However, the recovery into the prices has been witnessed since then as once again prices clock above its long term moving averages on daily charts. At current juncture stock has formed a cup and handle pattern which is a bullish signal for the prices moving forward.
Traders can accumulate the stock in a range of Rs 320-325 for the upside target of Rs 352 levels, and keep a stop loss below Rs 300.Axis Bank Ltd: Buy| Target: Rs 825| Stop Loss: Rs 700| Upside 10%
After testing 650 levels, the stock gave a smart recovery and has once again managed to reclaim above its long-term moving averages on the daily charts.
For more than four weeks, it has been consolidating in a broader range of Rs 700-750 along with consistent buying on every dip. The stock has given a consolidation breakout above the key resistance level of 750 this week along with marginally higher volumes.
The positive divergence on the secondary oscillators also suggests for the next up leg into the prices. So, traders can accumulate the stock in the range of 750-753 levels for the upside target of 825 levels, and a stop loss can be placed below Rs 700.
(The author is Sr. Technical Analyst at SMC Global Securities Ltd)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.