Looking for medium term buys? 3 stocks which could give 8-23% return in 3-6 months

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26 Aug, 2025 12:21

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Dharmesh Shah

The Nifty on the weekly chart formed a bull candle with a small wick on either side, indicating buying demand emerged near 50 percent retracement of the last leg of the rally (10,418-10,710), indicating follow through strength to last week’s hammer candle signifying positive price structure.

The index in the current week’s corrective decline held around its previous-week low (10,550) and witnessed a steady pullback, signalling the presence of strong support around 10,550 levels.

Going forward, we expect the Nifty to form a higher base formation by oscillating in a broader range of 10,770–10,550. This would make the market healthy and pave the way to head towards 10,930 in coming weeks as it is the confluence of:

a) 80 percent retracement of major decline seen in February-March (11,172 – 9,952), at 10,927
b) May’s high of 10,929

The key point to highlight is that the broader markets consisting of Nifty midcap and small cap have recorded a breakdown from March lows, indicating extended profit booking.

However, since CY15-16, Nifty midcap and small cap have not corrected over 20 percent and 30 percent, respectively. In the current scenario, both Nifty midcap and small cap have already corrected 17 percent and 25 percent, respectively.

We believe the current sell-off in the broader market is approaching its price-wise maturity level supported by oversold placement of stochastic oscillator, indicating limited downside.

However, we believe that the broader market will undergo time-wise base formation which, in turn, will create a launch pad for the next leg of upside.

Thus, at the current level, we would advise investors’ not to panic at the current juncture and utilize any decline from the current level to accumulate quality stocks in a staggered manner.

Structurally, we believe the Nifty would continue with ongoing healthy consolidation near the 50 percent retracement area of the last leg of the up move (9,952–10,929), around 10,450 and forming a higher base formation.

Going ahead, we expect the Nifty to hold the key value area of 10,450 as it is a confluence of:

a) placement of upward sloping trend line drawn adjoining 9,952– 10,418 around 10,525
b) 50 percent retracement of (9,952-10,929), placed at 10,440
c) low of May is placed at 10,418

Here is a list of top three stocks which could give 8-23 percent return in the next six months:

Bajaj Finserv: Buy | CMP: Rs 5,914 | Target: Rs 6,400 | Stop loss: Rs 5,650 | Return 8% | Time frame: 3 months

The share price of Bajaj Finserv is in a strong uptrend forming a higher peak and higher trough in all time frame indicating positive bias in the stock.

It has formed a life high of Rs 6,156 during the end of May 2018. The sideways consolidation of the last four sessions has helped the stock to work off the excesses built in the previous rally.

The rebound on Wednesday’s session from the support level highlights positive bias and provides fresh entry opportunity.

The stock is seen taking support around the Rs 5,650-5,700 levels being the confluence of the following technical observation:

a) Trendline support joining the highs of December 2017 (Rs 5,444) and April 2018 (Rs 5,586) placed around Rs 5670 levels highlighting a change of polarity as previous resistance reversed its role and acting as a support.
b) Retracement of the previous up move Rs 5,225 to Rs 6,156 placed at Rs 5,690 level
c) The rising 21 days EMA which is currently placed at Rs 5,749 levels

Among the oscillators the daily stochastic has generated a buy signal at the oversold territory thus supports the positive bias in the stock.

Based on the above technical observation the stock is likely to continue with positive bias and head towards Rs 6,400 levels being the 161.8 percent external retracement of the immediate previous decline (Rs 6,156 – Rs 5,682).

AIA Engineering: Buy | CMP: Rs 1,550 | Target: Rs 1,850 | Stop loss: Rs 1,395 | Return 19% | Time frame: 6 months

The share price of AIA Engineering is in a strong uptrend forming a rising peak and rising trough and has recently registered a breakout above the three months consolidation (Rs 1,350-1,494).

Thus, it offers a fresh entry opportunity from a medium term prospective. The base of the last three months consolidation is placed at the major support area around Rs 1,340-1,390 as it is the confluence of the following technical parameters:

a) A rising trend line support joining the major lows since September 2016 currently placed at Rs 1,390
b) The long term rising 52 weeks EMA, which has acted as strong support for the stock since April 2016
c) 80 percent retracement of the previous major up move (Rs 1,273-1,709) is placed around Rs 1,360 levels

Time wise, the stock has already taken 25 weeks to retrace just 80 percent of the previous 15 weeks up move from Rs 1,273 to Rs 1,709. Slower pace of retracement of the rally is a cornerstone of a bullish price structure and indicates the corrective nature of price decline.

Among the oscillators, the weekly MACD has generated a bullish crossover above its signal line thus supports the positive bias in the stock.

Based on the above technical parameter we expect the stock to continue with its current uptrend and head towards Rs 1,850 as it is the 138.2 percent external retracement of the entire previous decline (Rs 1,709-1,320)

Abbott India: Buy | CMP: Rs 6,441 | Target: Rs 7,960 | Stop loss: Rs 5,950 | Return 23% | Time frame: 6 months

The share price of Abbott India is in a strong uptrend forming a rising peak and rising trough and is seen sustaining above the neckline of the recent rounding pattern breakout. Thus, it offers a fresh entry opportunity from a medium term prospective.

The entire price action since September 2015 high of Rs 6,177 has taken the shape of a rounding pattern as can be seen in the adjacent chart. The base of rounding pattern is placed at the 50 percent retracement of the previous major up move (Rs 1,730 – 6,177) highlighting positive price structure.

The share price has registered a resolute breakout above the neckline of the rounding pattern during April 2018. It is seen consolidating above the same in the last eight weeks, thus providing a fresh entry opportunity to ride the next up move in the stock

Time wise, the stock has seen a faster retracement of the last falling segment as 23 months decline (Rs 6,177 to 4,100) was completely retraced in just eight months signalling a robust price structure and positive bias in the stock.

Among oscillators, the monthly MACD is in a rising trend and is diverging from its signal line. Thus, it supports the positive bias in the stock

The stock is likely to continue with its current uptrend and head towards Rs 7,984 being the measuring implication of the rounding breakout Rs 6,030-4,100=1930 points added to the neckline of the rounding pattern 6030+1930=7960

Disclaimer: The author is Head Technical, AVP at ICICIdirect.com Research. 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.