If the Nifty closes above 11,055, it will fuel a rally that can take the index towards 11,150-11,200 levels in the near-term.
By Ashish Chaturmohta
The Nifty closed at 11,036, up 0.3 percent, on September 11, the fifth consecutive day that the index closed in the green after trading in a narrow range of 43 points with a positive bias.
The broader market indices—BSE Midcap and Smallcap—outperformed the benchmark with 1.04 percent and 1.43 percent gains, respectively, for the day.
The market breadth on the NSE was positive, with almost 3:1 ratio. The index formed a doji candle on the daily chart.
The Nifty has been forming higher highs and higher lows this week. A cross above 11,055 will fuel a rally, which could take the index towards 11,150-11,200.
This is a critical resistance zone for the market, where multiple resistances are seen and need to be taken out to show strength.
On the downside, immediate support is seen at 10,965. A break below could fuel profit taking, which could see the index heading to 10,850 and 10,740 levels.
For September expiry options, the maximum open interest (OI) for the put option is seen at strike price 10,800, followed by 11,000.
For call options, the maximum open interest is seen at 11,500, followed by 11,200. Put unwinding was seen in 10,800 and Call writing in 11,300 and 11,400.
The India VIX declined by 3.03 percent to close at 15.37 levels. After trading in a range of 18.5-16, VIX is moving lower which should support the market in sustainable bounce back. However, VIX moving back above 16 will cap the market.
A list of top five stocks that could give 8-12 percent return in the next one-three months:
Bajaj Finserv Ltd: Buy| LTP: Rs 7,354| Stop Loss: Rs 7,100| Target: Rs 8,000| Upside 8 percent
The stock touched an all-time high of Rs 8,580 in July 2019 and then corrected to hit a low of Rs 6,581 the next month. But, on a closing basis, the stock has managed to hold above 50% (6767) retracement of the major rise from Rs 4,955 to Rs 8,580.
The stock has seen a bounce back from lower levels twice, which indicates that it is forming a double bottom on the daily chart.
It looks like the stock formed a low near its 200-day moving average (DMA), which will also act as crucial support in the near-term. Thus, the stock can be bought at current levels and on dips towards Rs 7,290, with a stop loss below Rs 7,100 and a target of Rs 8,000 levels.
Larsen & Toubro Ltd: Buy| LTP: Rs 1,357| Stop Loss: Rs 1,320| Target: Rs 1,500| Upside 10 percent
The stock touched an all-time high of Rs 1,607 in May and then corrected down towards Rs 1,274 in August.
The stock has taken support around its previous swing low of Rs 1,285 and is now trading above it. After consolidating between Rs 1,380 and Rs 1,274, the stock has formed a short-term bullish inverted head and shoulders pattern on the daily chart.
The relative strength index (RSI) has given a positive crossover, with its average on the weekly chart after two months. Thus, the stock can be bought at current levels and on dips towards Rs 1,340 with a stop loss below Rs 1,190 and a target of Rs 1,500 levels.
Avenue Supermarts Ltd (DMart): Buy| LTP: Rs 1,571| Stop Loss: Rs 1,525| Target: Rs 1,700| Upside 8 percent
After hitting a low of Rs 1,228 in May, the stock has been moving higher along the rising support trend line connecting closing price of Rs 1,234 and Rs 1,397.
It has formed a base after consolidating between Rs 1,530 and 1,230 levels. The stock witnessed a breakout above Rs 1,530 levels and retraced back on below-average volumes, suggesting market participants are holding onto the stock.
It looks like the price has again moved up to a eight-month high. If we look at higher time frame weekly chart, the stock is in a process of forming a double bottom pattern with lows at Rs 1,230 odd levels.
MACD is trending higher after moving above the equilibrium level of zero on the weekly chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,550, with a stop loss below Rs 1,525 and a target of Rs 1,700 levels.
Minda Industries Ltd: Buy| LTP: Rs 337| Stop Loss: Rs 323| Target: Rs 380| Upside 12 percent
The stock touched an all-time high of Rs 459 in July 2018 and then corrected to Rs 261 levels in February. The stock bounced back to Rs 393 and then again corrected to test a low of Rs 261.
It looks like the stock is forming a double bottom pattern on the weekly charts after the recent rally. The lows were formed on higher volumes suggesting accumulation in the stock at lower levels.
The price has moved above its 200-DMA. The RSI has given a positive crossover with its average on the daily time frame and is turning up from 50 levels on the weekly chart.
Thus, the stock can be bought at current levels and on dips towards Rs 332, with a stop loss below Rs 323 and a target of Rs 380 levels.
Prestige Estates Projects Ltd: Buy| LTP: Rs 303| Stop Loss: Rs 289| Target: Rs 340| Upside 12 percent
The stock has been in an uptrend, forming higher tops and higher bottoms for the last 11 months on the weekly charts. The stock was facing some resistance around Rs 285 levels, where 61.8% Fibonacci retracement of the entire decline from 357 to 163 was seen.
After consolidating for the last five months between Rs 240 and Rs 285, the stock is sustaining above the breakout levels.
The price has given a breakout on the upside from the Bollinger Band, with the expansion of bands indicating a continuation of the trend in the direction of breakout on the weekly chart.
MACD has given positive crossover with its average above equilibrium level on the weekly chart. Thus, the stock can be bought at current levels and on dips towards Rs 298 with a stop loss below Rs 289, and a target of Rs 340 levels.
Note: Time Frame for all the above recommendation is 1-3 months.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.