Ashish Chaturmohta Sanctum Wealth Management
Following positive global cues, the market saw a gap up opening, but lack of followthrough action saw the Nifty closed with a gain of 0.41 percent
at 10,772 on January 7. For the day, BSE MidCap and SmallCap closed flat.
Market breadth on NSE was also 1:1. Intraday, Nifty filled the opening gap and has formed small bearish candlestick for the day. But looking at trading action from December 2018, the index has been rangebound with higher end capped at 10,985 levels, and on the lower side forming higher lows indicating buying coming at higher levels. Thus, forming an Ascending Triangle that is a bullish pattern and breakout is expected on the upside.
Now, January 4 low of 10,641 becomes critical that it needs to hold for the market to see breakout on the upside. Immediate resistance is seen at 10,836, but Nifty needs to cross 10,985 with momentum and sustain above it for breakout to be confirmed. Then the index can rally towards 11,090 and 11,160 initially.
On the downside, breaking below 10,641, the market can see decline towards 10,535 and then 10,350. In Nifty options, maximum open interest for Puts has been seen at strike price 10,500 followed by 10,000. For Calls, it has been seen at strike price 11,000 followed by 11,500.
Put writing was seen at strike price 10,700 and 10,800 suggesting supports are shifting higher; whereas for Call, some writing was seen in higher strikes 11,200-11,300 along with unwinding in 10,900.
India VIX closed at 16.30, up by 0.9 percent for the day. It needs to sustain below 16 for the market to move higher.
Info Edge (India): Buy | LTP: Rs 1,622 | Target: Rs 1,800 | Stop loss: Rs 1,540 | Return: 11 percent
The stock touched an all-time high of Rs 1,698 in the month of September and then corrected down to Rs 1,310. Since then it has been
consolidating between Rs 1,700 and Rs 1,300 for last four months and has formed a base for next leg of the up move. The lows were formed
at 200-day moving average indicating value area for the stock.
Though the stock is witnessing resistance on the upside, the stock has rallied sharply from the lower end of the range and declines have been on below average volumes indicating buying participation in the counter.
MACD line has given positive crossover with its average above equilibrium level of zero on weekly chart suggesting resumption of the uptrend. Thus, the stock can be bought at current levels and on dips to Rs 1,600 with a stop loss below Rs 1,540 for a target of Rs 1,800.
Bharat Electronics: Buy| LTP: Rs 91 | Target: Rs 105 | Stop loss: Rs 85 | Return: 15 percent
The stock was in decline mode for last one year and touched low of Rs 74 in September 2018. It then rallied to Rs 99 and then again tested the low of Rs 74 and bounced back to current levels. Thus, forming Double Bottom pattern on the daily chart. Volumes have been above average indicating buying participation in the stock.
ADX line indicator of trend strength has moved above neutral level of 20 on the daily chart indicating strength in the uptrend. Thus, the stock can be bought at current levels and on dips to Rs 89 with a stop loss below Rs 85 for a target of Rs 105.
Axis Bank: Buy| LTP: Rs 637 | Target: Rs 725 | Stop loss: Rs 600 | Return: 13 percent
The stock has formed Symmetrical Triangle pattern on the weekly chart and has been trading in a range of Rs 650 and Rs 350 for almost three years now. On the daily chart, the stock has seen a sharp bounceback from 200-day moving average.
Relative Strength Index and Stochastic have given positive crossover with their respective averages on the daily chart. On the monthly chart, ADX line indicator of trend strength is moving up from the neutral level of 20 suggesting strength emerging long-term trend. Thus, the stock can be bought at current levels and on dips to Rs 620 with a stop loss below Rs 600 for a target of Rs 725.
Torrent Pharmaceuticals: Buy| LTP: Rs 1,824 | Target: Rs 2,000-2,050 | Stop loss: Rs 1,720 | Return: 12 percent
The stock has seen major consolidation between Rs 1,700 and Rs 1,200 over a period of more than two years. In the month of September, the stock witnessed breakout to touch high of Rs 1,873 and then retraced back below the breakout level. Price found support at 100-day moving average and moved above the breakout.
Price has been consolidating in a range of Rs 1,820 and Rs 1,720 for last few weeks and poised for breakout on the upside. Thus, the stock can be bought at current levels and on dips to Rs 1,800 with a stop loss below Rs 1,720 for a target of Rs 2,000-2,050.
NBCC India: Buy| LTP: Rs 61 | Target: Rs 70 | Stop loss: Rs 57 | Return: 14 percent
The stock has been in decline mode for more than a year now. It touched low of Rs 47 last month. It has formed Double Bottom pattern on the daily chart around its previous lows indicating value area for the stock. Volumes have been high indicating accumulation in the stock at lower levels.
Price and RSI are showing positive divergence on the weekly chart; i.e. indicator is forming higher lows while the price is making lower lows. Thus, the stock can be bought at current levels and on dips to Rs 59 with a stop loss below Rs 57 for a target of Rs 70.
The author is Head of Technical and Derivatives at Sanctum Wealth Management.
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
