Use this correction to accumulate longs in the Nifty with the stop loss of 11,883. The next possible target for the Nifty is seen around 12,300 levels.
Profit booking continued for the second day in the row, with the Nifty falling eight points to close at 12,048 on December 2. However, the primary trend of the Nifty is still bullish with index trading above its 20, 50, 100 and 200-DMA.
The index is also forming higher tops and higher bottoms, which is a positive sign for the bulls. It has been trading in a rising wedge pattern on the daily charts.
In the week gone by, the Nifty found resistance at the upper band of this Wedge and witnessed profit booking. The 20-DMA acted as a reversal point in the recent past. At present, this moving average is placed at 11,964, which would act as immediate support for the Nifty.
Technical indicators are suggesting that the positional trend of the market is still bullish. The market trend would continue to remain bullish until the Nifty violates the recent low of 11,883.
Unless Nifty closes below 11,900 levels, the trend would be considered bullish for the market from the derivative side as well. On the higher side, resistance is seen at 12,100-12100 levels where Calls have been written.
Considering the technical and derivatives evidences discussed above, we believe that the recent fall in the market is a running correction in the overall uptrend.
Therefore, our advice would be to use this correction to accumulate longs in the Nifty with the stop loss of 11,883. The next possible target for the Nifty is seen around 12,300 levels.
Here is a list of top three stocks that could return 7-12 percent in the next three-to-four weeks:
Kotak Mahindra Bank: Buy| LTP: Rs 1633| Target: Rs 1,750| Stop-Loss: Rs 1565| Upside 7%
Kotak Mahindra Bank has broken out from the downward slopping trend line, adjoining the high of September 26 and November 18.
The stock price has also broken out on the daily chart by closing above the important resistance level of Rs 1627 level with higher volumes. The short-term trend of the stock is bullish where the stock price is trading above its 20, 100 and 200 day SMA.
Oscillators and momentum Indicators like RSI and MACD showing strength in the stock on the daily and weekly charts.
Therefore, we recommend buying Kotak Mahindra Bank for the upside target of Rs 1750, and keep a stop loss at Rs 1,565
BEML: Buy| LTP: Rs 1037| Target: Rs 1160| Stop-Loss: Rs 970| Upside 12%
The stock price has broken out on the daily chart on Monday with higher volumes by closing above the resistance level of 1030 levels. It has been forming a higher top higher bottom formation on the daily charts.
Oscillators and momentum Indicators like RSI and MACD have turned bullish on the daily and weekly charts.
It is one of the best performing PSU stocks in the recent past and considering the Technical Indicators mentioned above we believe that it is likely to continue for the coming weeks.
Therefore, we recommend buying BEML for the target of Rs 1160 and keep a stop loss at Rs 970.
Astrazeneca Pharma: Buy| LTP: Rs 2811| Target: Rs 3,100| Stop-Loss: Rs 2650| Upside 10%
AstraZeneca Pharma has broken out from the last 10-Day trading range to close above the resistance level of Rs 2770 levels. It has broken out on the daily chart yesterday with huge volumes to close at an all-time high.
The stock price has been taking support around 20-Days SMA for the last many months. Oscillators and momentum Indicators like RSI and MACD showing strength in the stock on the weekly charts.
Therefore we recommend buying AstraZeneca Pharma for the upside target of Rs 3100 and keep a stop loss at Rs 2650
(The author is Senior Technical & Derivatives Analyst, HDFC Securities)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.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.