Any upside towards the 11,400-mark can be used to go short, with a stop loss of 11,554, says Mehul Kothari
The past couple of sessions were extremely dramatic for the domestic markets, where benchmarks witnessed a roller coaster ride.
On October 9, the Nifty ended its six-day losing streak by rising 200 points, while the Nifty Bank index surged more than 1,000 points. A day later, the selling pressure at higher levels again saw the Nifty lose around 80 points from its previous close. The Nifty Bank index corrected by around 800 points during the process.
After the October 10 session, the Nifty spot slipped again below its 200-day simple moving average (SMA) placed at 11,268, while the Nifty Bank index is way below its 200-SMA.
Further, there is an evening star pattern on the weekly chart of the Nifty spot, which is expected to be negated only above 11,554, which is the previous week’s high.
Thus, we maintain our ‘sell on rise’ stance for the coming week. Any upside towards the 11,400 can be used to go short, with a stop loss of 11,554.
On the downside, the intermediate support for the index is placed at 11,060. A move below the same, might extend the fall towards the 10,900-mark.Traders are advised to make stock-specific trades and follow a strict stop loss in for long positions since volatility is at its peak.
A list of top three stocks that could give 7-10% return in the next 1-2 months:
Biocon: Buy| LTP: Rs 240| Target: Rs 265| Stop loss: Rs 223| Upside 10.4 percent
Despite the ongoing struggle in most of the pharma stocks, Biocon has been an outperformer for quite some time.
On the daily chart, the stock confirmed a breakout from its previous swing high of Rs 238 and has closed above the same.
The price action is coupled with a range breakout in its daily relative strength index (RSI), which indicates strength.Traders are advised to buy the stock between Rs 240 and Rs 234 for the upside target of Rs 265, and a stop loss of Rs 223 (two–three weeks).
MindTree: Buy| LTP: Rs 725| Target: Rs 780|Stop loss: Rs 705| Upside 7.58 percent
For the last 12 weeks, Mindtree has been consolidating in a broad range just above the placement of its 200-week simple moving average.
At this juncture, it is on the verge of a breakout on the daily chart, which will get confirmed above 730.
The placement of the weekly and daily oscillators along with the opening interest activity in futures indicates a possibility of a fresh rally above the 730 mark.
Traders are advised to buy the stock once it clears Rs 730 for the upside target of Rs 780, with a stop loss of Rs 705 (one–two months).NMDC: Sell| LTP: Rs 96| Target: Rs 87|Stop loss: Rs 102 | Downside 9.38 percent
In the middle of August, NMDC confirmed a trend line breakdown below the Rs 94 mark and nosedived to Rs 75.
Off late, the stock has recovered sharply and is again hovering near the extension of the same trend line.
The price action has taken the shape of a rising wedge pattern, also known as a dead cat bounce.
Further, the placement of the 200-DSMA is acting as a resistance for the stock, and the risk-reward looks lucrative to go short.
Traders are advised to sell the stock between Rs 96 and Rs 98 for the downside target of Rs 87, with a stop loss of Rs 102 (one–two months).
(The author is Senior Technical Analyst, IndiaNivesh Securities Ltd)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.The Great Diwali Discount!
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