It would be wise to remain cautious at the current juncture as upside seems to be limited.
Markets gave a huge thumbs up in the first half on May 23 amid a stellar show by the Bharatiya Janata Party, but the momentum fizzled out soon after.
Post hitting fresh all-time highs, indices failed to hold on, as a lot seem to have already factored in by the markets. Investors and traders preferred to book profits at higher levels which dragged the indices to close with losses.
Our daily chart analysis indicates that Nifty slipped as a negative divergence was observed on the chart. Even the Bank Nifty chart indicated a negative divergence on the RSI.
The similar divergence was also observed in the banking heavyweights like HDFC Bank, ICICI Bank, SBI and Axis Bank, which added to the selling pressure. It would be wise to remain cautious at the current juncture as upside seems to be limited.
Here is a list of top three stocks which could give up to 5% return in the next 3-4 weeks:
Hindustan Zinc: Sell May Futs| LTP: Rs 248| Target: Rs 236| Stop Loss: Rs 255.5| Downside 5%
The stock has shown weakness in the recent past and has also broken down from a distribution pattern on the daily chart.
Negative crossovers on the RSI and Hindustan Zinc failing to hold above its short-term moving averages indicate that the current weakness is likely to extend further. Investors should hold on to short positions with a mentioned stop loss on a closing basis.
Divi’s Laboratories: Buy| LTP: Rs 1731| Target: Rs 1819| Stop Loss: Rs 1688.5| Upside 5%
It is a solid trending stock and has also managed to continue with the higher top higher bottom structure.
Divi’s Labs also managed to stage a smart recovery from its short term moving averages which indicates every decline is used to accumulate. We expect the current momentum to extend further in the near term.
Eicher Motors: Sell May Futs| LTP: Rs 20341| Target: Rs 19,410| Stop Loss: Rs 20,940| Downside 5%
The stock has rallied smartly in the recent past, but it has failed to surpass its April 2019 high. Eicher was also unable to hold above its 50-DEMA.
In addition, the stock has also formed a bearish engulfing pattern indicating that a short term reversal is on the cards.
(The author is a Senior Technical Analyst, IIFL)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.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.