After a quiet start to trade, markets drifted lower through the session to close at 10,919, down by 0.89 percent on August 21. The broader market indices, the BSE Midcap and Smallcap lost 1.32 percent and 1.43 percent, respectively for the day.
Market breadth on the NSE was negative with three declining stocks compared to every advancing.
Nifty, after hitting low of 10,782, has been trading in a narrow range with a positive bias to form the bearish pole and flag pattern on the daily chart. On August 21, it witnessed a breakout from the pattern with a bearish candle that indicates a resumption of the downtrend.
Confirmation of the breakdown will come once the index starts to trade below 10,782. A break below 10,782 would take Nifty towards the next support, which is placed at 10,580.
On the upside, 11,150-11,181 zone needs to be taken out for any sustainable bounce back in the market towards 11,350.
In the Nifty options, maximum open interest for Put is seen at strike price 11,000 followed by 10,500; while for Call maximum open interest is seen at 11,000 followed by 11,500. Call writing was seen in 11,000 and 11,100 indicating immediate overhead resistance for the market.
Here are five stocks that could give 7-15 percent return in the next 1-3 months:
Dr Lal Path Labs: Buy| LTP: Rs 1,202| Stop loss: Rs 1,150| Target: Rs 1,350| Upside: 12 percent
The stock has been forming higher tops and higher bottoms on the weekly chart. It has been consolidating above the 89-day exponential moving average between Rs 1,180 and Rs 1,030 for the last couple months.
Last week, the stock witnessed a breakout from the said range with strong momentum and high volumes that indicates buying participation in the stock.
The stock has touched a 33-month high and has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of the breakout on daily and weekly charts.
MACD has given a positive crossover with its average on the weekly chart above the equilibrium level. Thus, the stock can be bought at current levels and on dips towards Rs 1,185 with a stop loss below Rs 1,150 and a target of Rs 1,350.
Hindustan Unilever Ltd: Buy| LTP: Rs 1,850| Stop loss: Rs 1,795| Target: Rs 2,000| Upside: 8 percent
After touching a low of Rs 1,477 in October last year, the stock witnessed a strong rally to touch its all-time high of Rs 1,869 in December. Since then, the stock has been consolidating its gains between Rs 1,870 and Rs 1,650 for the last eight months.
The stock is looking bullish on the short-and-medium-term chart patterns and is likely to see a breakout on the upside.
MACD has given positive crossover with its average on the weekly chart above the equilibrium level. Stochastic has given positive crossover with its average on the daily chart.
Thus, the stock can be bought at current levels and on dips towards Rs 1,835 with a stop loss below Rs 1,795 and a target of Rs 2,000.
Heidelberg Cement India: Buy| LTP: Rs 200| Stop loss: Rs 188| Target: Rs 230| Upside: 15 percent
The stock has been in a long-term uptrend as it has been forming higher tops and higher bottoms on the weekly chart.
After touching a high of Rs 215 in May, the stock went into a consolidation mode between Rs 215 and Rs 185 odd levels for the last three months.
Currently, the stock is trading below the breakout and is likely to resume its uptrend once it crosses trend line resistance of Rs 205 on a sustainable basis.
MACD has moved above the equilibrium level of zero on the daily chart. Stochastic has given positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips to Rs 196 with a stop loss below 188 and a target of Rs 230.
Infosys Ltd: Buy| LTP: Rs 799| Stop loss: Rs 775| Target: Rs 860| Upside: 7 percent
The stock has witnessed consolidation between Rs 770 and Rs 700 odd for the last five months. Last month, the stock saw a breakout from the range with strong momentum and high volumes. And, since then it has been consolidating in a range of Rs 800-760.
Now, the stock has closed at the upper-end of this short-term consolidation and a new all-time high on a closing basis suggests that the stock is likely to resume the uptrend.
MACD has given positive crossover with its average above equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 790, with a stop loss below Rs 775 and a target of Rs 860.
Raymond Ltd: Sell| LTP: Rs 566| Stop loss: Rs 590| Target: Rs 500| Downside: 11 percent
The stock is in a long-term downtrend forming lower tops and lower bottoms. The price has given a breakdown from the bearish pole and flag pattern seen on the daily chart.
It has also broken below the key pivotal swing low of Rs 593 with long body bearish candlestick and high volumes, which indicates fresh supply pressure.
The price has given a breakdown from the Bollinger Band. MACD has also given a negative crossover with its average below equilibrium level of zero the on the daily chart.
Thus, the stock can be sold at current levels and on a rise towards Rs 575 with a stop loss above Rs 590 and a target of Rs 500.
The author is Head of Technical and Derivatives, Sanctum Wealth Management.
Disclaimer: The views and investment tips expressed by investment expert 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.
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