Ashish Chaturmohta Sanctum Wealth Management
The market witnessed a gap-up opening following positive global cues but drifted into negative in the first half to rally strongly in the latter half. The Nifty closed on November 26 with 0.97 percent gains at 10,628.
The market breadth was disappointing on NSE with seven stock advancing for 10 declines. Lack of broader market participation is a concern as BSE Midcap and Smallcap remained flat for the day.
After touching high of 10,775 last November 19, the index had been declining and touched a low of 10,490 on November 26 where it found support at its 20-day moving average.
Now, the index has an immediate resistance at 10,650-10,660 which needs to be crossed for the rally to continue towards 10745-10845 levels, where 200-day moving average and falling gap area resistances are seen.
On the downside, immediate support is seen at 10,490-10,450. Breaking below this level, the index can decline towards 10,300.
Here is a list of top three stock which could give 11-15 percent return in next one month:
Larsen & Toubro Limited: Buy| LTP: Rs 1,422| Stop loss: Rs 1,360| Target: Rs 1,600| Return: 12 percent
The stock touched a high of Rs 1470 in February this year and had been in sideways to negative correction mode between Rs 1,470 and Rs 1,182 for the last nine months.
Now, the stock crossed its falling resistance trend line which connected highs of Rs 1,470, Rs 1,425 and Rs 1,390 on the weekly chart and continues to trend higher. Thus, signaling the end of correction with a sharp rally from lower levels.
MACD line has given positive crossover with its average and moved above equilibrium level of zero on the weekly chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,395 with a stop loss below Rs 1360 and a target of Rs 1,600.
PVR Limited: Buy| LTP: Rs 1,437| Stop loss: Rs 1,380| Target: Rs 1,600| Return: 11 percent
After hitting a high of Rs 1,655 in May last year, the stock has been in a correction mode. In the last four months, the stock has formed a double bottom on the weekly chart.
The lows of the bottom were formed at 200-day weekly moving average and it is now trading above the average on the daily chart. Currently, the stock is trading at a breakout level and is consolidating in a narrow range which is generally expected to give breakout in direction of previous of the previous trend i.e. uptrend.
The Relative strength index (RSI) and Stochastic have given positive crossover with their respective averages on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,415 with a stop loss below Rs 1,380 and a target of Rs 1,600.
Axis Bank Limited: Buy| LTP: Rs 631| Stop loss: Rs 600| Target: Rs 730| Return: 15 percent
The stock has formed a symmetrical triangle pattern on the weekly chart and is trading in a range of Rs 650 and Rs 350 for more than three and half years.
On the daily chart, the stock has seen a sharp bounce back from 200-day moving average and price has been consolidating in narrow between Rs 635-600 for the last three week.
Thus, it has formed bullish pole and flag pattern on the daily chart that is expected to give a breakout on the upside.
ADX line indicator of trend strength is steadily moving higher above neutral level of 20 indicating strength in up move. Thus, the stock can be bought at current levels and on dips towards Rs 620 with a stop loss below Rs 600 and a target of Rs 730.
Tata Elxsi Limited: Buy| LTP: Rs 994| Stop loss: Rs 950| Target: Rs 1,100-1,135| Return: 14 percent
The stock touched an all-time high of Rs 1,491 in the month of July and then declined to touch a low of Rs 922 in October. The stock has made a series of lows in the region of Rs 950-920 which is similar to the lows made in February indicating strong support area for the stock.
Relative strength index has given positive crossover with average on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 980 with a stop loss below Rs 950 and a target of Rs 1,100-1,135.
Info Edge (India) Limited: Buy| LTP: Rs 1,455| Stop loss: Rs 1,385| Target: Rs 1,600-1,620| Return: 11 percent
The stock witnessed a rally from June low of Rs 1,126 to September high of Rs 1,698. The stock corrected towards Rs 1,310 in October and again tested the low this month after a bounce back high of Rs 1,625.
The stock took support at its 200-day moving average and then bounced back. The fall has retraced 61.8 percent Fibonacci retracement level of the rise from Rs 1,126 to Rs 1,698. Thus, indicating support zone for the stock where it is forming a double bottom pattern on daily chart.
The stock again tested 200-day moving average twice and then bounced back. Relative strength index has turned up from its average and moved above 50.
Thus, the stock can be bought at current levels and on dips towards Rs 1,435 with a stop loss below Rs 1,385 and a target of Rs 1,600-1,650.
The author is Head of Technical and Derivatives at Sanctum Wealth Management.
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