Aditya Agarwal
Indian markets remained choppy on Thursday, with the Nifty finally managing to close at the day’s low of 10,716, a loss of almost 25 points. At higher levels, nervousness was clearly visible as traders were hesitant to initiate fresh long positions ahead of Karnataka state assembly elections and were using any pullback towards 10,780-10,800 levels to book profits.
The weekly relative strength index (RSI) (14) is hovering near the crucial level of 60. Traders need to closely track RSI’s momentum as it will dictate near-term direction. Daily RSI has given a negative crossover and indicates short-term correction.
In comparison to Nifty, the Bank Nifty looks quite promising at current levels. The Bank Nifty managed to breach its resistance zone of 25,800-26,000. Any dip in the bank index can be utilised to create fresh longs with short-term targets of 26,500-26,800 levels. However, if it closes below 25,800, then profit booking can drag it towards 25,500-25,200.
Call writing at 10,800 will act as strong supply for the Nifty and any pullback towards those levels can be used to exit longs. Put writing at 10,600-10,500 will act as a strong support zone for indices.
In the next few trading sessions, the Nifty is expected to hover between 10,500 and 10,800, with a bit of negative bias.
State elections in Karnataka, scheduled for Saturday, will keep the indices volatile and any unfavourable result may trigger a sell-off that may drag the Nifty towards 10,500/10,300 levels.
Here is a list of top three stock ideas that can return up to 12% in the short-term:
HCL Technologies: Buy around Rs 925-930| Target: Rs 1,020| Stop loss: Rs 895| Return 9.6%
After its poor Q4 show, HCL Tech saw a sharp selloff and in just two trading session, the stock shed almost 10 percent and made low of Rs 900 last week.
Since then, the stock is trading in a narrow band of Rs 900-935 levels with an increase in delivery volumes. HCL Tech has multiple supports placed in the range of Rs 890-910 and is forming a short-term base around its support levels.
Its 200-DMA (days moving average) is placed around Rs 910 which will act as a strong support. From current levels, the risk-to-reward ratio is in favor of buyers and we recommend short-term traders to initiate long positions with a target of Rs 1,020 and a stop loss placed below Rs 895.
ACC: Sell around Rs 1,500-1,510| Target: Rs 1,400| Stop loss: Rs 1,555| Return 6%
For the last couple of weeks, ACC is in a downtrend and any pullback rally in the stock is used to exit from long positions and create fresh shorts.
On the weekly charts, the stock has made a double top pattern around Rs 1,860 levels and a breakdown from the said pattern came below Rs 1,600 levels.
In Thursday’s session, ACC closed below its short-term support level of Rs 1,500 and closed below that.
We expect the downtrend in the counter will continue and any pullback towards Rs 1,510-1,520 can be used to initiate short positions with a target of Rs 1,400 and a stop loss placed above Rs 1,555.
NMDC: Sell below Rs 116| Target: Rs 102| Stop loss: Rs 121| Return 12%
After giving a breakdown from its long-term trendline support of Rs 124, the stock has been hovering in a narrow band of Rs 116-125 for the last 7 weeks.
On the higher side, NMDC has a strong resistance around Rs 126 zone and heavy selling pressure is seen around those levels.
In Thursday’s trade, the stock closed near Rs 116 but added huge short positions in derivatives segment indicating more selloff in the counter.
Our short-term view remains negative on NMDC and traders can short below Rs 116 with a target of Rs 102 and a stop loss of Rs 121.
Disclaimer: The author Head Technical Research, Way2Wealth Brokers Pvt. Ltd. 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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