Shabbir Kayyumi
The Nifty is inching forward steadily and has managed to close above the short-term moving average 20 DMA. It has also managed to close above the previous week's high (10,967) on the back of sustained buying, which suggests that positive bias will continue.
For the last 35 days, the Nifty is trading in a range of mere 350 points. However, Bollinger band squeeze can also be seen on the charts, which suggests volatility breakout can come above the upper band placed around 11,181 levels that can add strength in the current upmove. Declining histogram in MACD in the weekly timeframe is also creating optimism.
Key breakout will come if the Nifty manages to close above crucial levels of August’s high (11,181), only then can prices push higher towards last swing high placed around 11,585 levels. Lower side support is maintained at around 10,700-10,800.
Bank Nifty
The banking index has managed to close above the previous week's high, forming a strong long body bullish pattern, indicating that a positive bias will continue. Nevertheless, a sustained move above last 5-weeks high, placed around 28,500 levels, will give a fresh breakout and prices can extend higher towards 20-week SMA standing around 29,510 levels. Moreover, the trading range for banking index will be 29,000-27,500 for the coming week.
Here is the list of five stocks that could return 8-14 percent:
ICICI Securities: Buy Around Rs 227 | Target: Rs 260 | Stop Loss: Rs 211 | Upside: 14 percent
The stock was undergoing a descending triangle consolidation in the last nine months and has recently given a breakout. The momentum oscillator RSI is in positive territory and is entering into a trending phase.
It is currently trading at a 10-week high, indicating a buying interest in the stock. The weekly structure, too, looks positive and poised for a positive run. We suggest buying ICICI Securities around Rs 227, with a stop loss of Rs 211 for the target of Rs 260 levels.
Wonderla Holidays: Buy Around Rs 253 | Target: Rs 290 | Stop Loss: Rs 230 | Upside: 14 percent
The stock has a negative momentum divergence in the weekly RSI indicator. The daily charts showed a double bottom and recently gave a breakout of its neckline as a confirmation. The daily momentum oscillator RSI is in positive territory and is entering into a trending phase.
The stock is trading above its key 50-day simple moving average, indicating a buying interest. We suggest buying Wonderla around Rs 253 levels, keeping stop loss of Rs 230 for the targets of Rs 290.
Hindustan Petroleum Corporation: Buy Around Rs 265 | Target: Rs 295 | Stop Loss: Rs 245 | Upside: 11 percent
The scrip spurted from a low of Rs 223, it showed pullback on upside and marked a high of Rs 275 levels and started consolidating. This pullback rally and consolidation has taken the form of a pole & flag pattern from the last few days. Currently, it is waiting for the breakout on upside, so that buying momentum can be accelerated further.
Emerging line of polarity on the daily chart is suggesting bullish momentum in the scrip. Indicator and oscillator are also showing conducive scenario in the coming sessions. One can go long in the scrip around Rs 265 for the target of Rs 295 levels, with a stop loss of Rs 245 levels.
Ratnamani Metals & Tubes: Buy Around Rs 915 | Target: Rs 1,000 | Stop Loss: Rs 878 | Upside: 9 percent
The stock has been progressing in a weekly retracement after the rally which started from May up to July. Currently, it is undergoing a rectangle consolidation, poised to break on the upside.
The momentum oscillator RSI is in positive territory and is entering into a trending phase. We recommend buying Ratnamani around Rs 915, keeping stop loss of Rs 878 for the target of Rs 1,000.
Tech Mahindra: Buy Around Rs 703 | Target: Rs 760 | Stop Loss: Rs 669 | Upside: 8 percent
After hitting the peak of Rs 836, the stock slipped to Rs 607 then it turned back after forming a congestion zone on the daily charts. As of now, sustainability above downward sloping line on the daily chart shows stability.
Declining histogram in MACD with a positive crossover below central line are creating optimism . As long as the stock sustains above Rs 669, possibility of moving on upside is higher and it can hit our first target of Rs 760 with an ease. We recommend buying Tech Mahindra around Rs 703, with stop loss of Rs 669 for the target of Rs 760.
(The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.)
Disclosure: Narnolia Financial Advisors/Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks. The stocks recommended are based on our analysis which is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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