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Last Updated : Dec 11, 2018 11:21 AM IST | Source: Moneycontrol.com

Looking for momentum plays? Top 3 ‘sell’ ideas that could return 10-12%

A break below 10440 levels could take the index towards the next support which is seen at 10250-10200 levels. The immediate level on the upside is seen at 10560-10600 and above that at 10750 levels.

Moneycontrol Contributor @moneycontrolcom
 
 
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Ashish Chaturmohta

Sanctum Wealth Management

The global market sell-off and reaction to state election exit polls led to a sharp gap-down opening for the domestic equity markets on December 10. The markets were unable to see a reasonable bounce back and closed near the lows of the day.

The market breadth on NSE saw four shares declining for every advance. The broader indices - BSE MidCap and SmallCap were down by 1.84 percent each for the day.

Close

After the gap-down opening, the Nifty traded in a narrow range for the rest of the session. The index closed in the support zone of 10,490-10,440, which was the minor swing lows on the up move.

A break below 10,440 could take the index towards the next support which is seen at 10,250-10,200. The immediate level on the upside is seen at 10,560-10,600 and above that at 10,750.

In the Nifty options, the maximum open interest for Puts is seen at strike price 10,000 followed by 10,200; while for Calls it is seen at strike price 11,000 followed by 10,700.

Call writing was seen in 10,500 to 11,000 while unwinding of Puts was seen in 10,600 and 10,700 along with open interest addition in 10,200 strikes indicating lower levels for the market.

India VIX witnessed 10 percent to close at 20.44. It has been consolidating between 17 and 22 for the last couple of weeks. Further, a rise in India VIX is going to accelerate the decline on D-Street. VIX needs to move below 17 for markets to stabilise.

Here is a list of top five stocks which could give 10-12 percent return in the next 1 month:

V-Guard Industries Limited: Buy| LTP: Rs 209| Stop loss: Rs 205| Target: Rs 230-235| Return: 12 percent

The stock, after hitting a high of Rs 255 in the month of April, saw profit taking to touch a low of Rs 159 in the month of October. Since then, the stock has rallied to current levels forming higher highs and higher lows.

The price has retraced 50 percent of the decline from Rs 255 to Rs 159 and is now trading around its 200-days moving average on the daily chart.

It has formed a bullish pole and flag pattern that is expected to give a breakout in the direction of trend i.e., uptrend. Thus, the stock can be bought at current levels and on dips towards Rs 205 with a stop loss below Rs 198 and a target of Rs 230-235.

L&T Technology Services Limited: Buy| LTP: Rs 1,551| Stop loss: Rs 1,490| Target: Rs 1,700| Return: 10 percent

The stock is in an uptrend forming higher tops and higher bottoms on the weekly chart. The price has rallied on high volumes and the correction which we saw were largely on below-average volumes indicating buying participation in the stock.

The stock has been holding above the rising trend line connecting the lows of Rs 1,156 and Rs 1,366. For the last three weeks, it has been consolidating in a range of Rs 1,590 to 1,490.

The relative strength index has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,530 with a stop loss below Rs 1,490 and a target of Rs 1,700.

Max Financial Services Limited: Sell| LTP: Rs 407| Stop loss: Rs 430| Target: Rs 365| Return: 10 percent

The stock is in a long-term downtrend forming lower tops and lower bottoms on the weekly chart. The stock has been unable to sustain above its 200-day moving average on a bounce back and eventually declined lower.

The price has again seen a reversal from the average and resumed the downtrend. The price has broken its short-term rising support trend line connecting the lows of Rs 354 and Rs 386.

The MACD line has also given a negative crossover with its average on the daily chart. Thus, the stock can be sold at current levels and on the rise towards Rs 415 with a stop loss above Rs 430 and a target of Rs 365.

Chennai Petroleum Corporation Limited: Sell| LTP: Rs 262| Stop loss: Rs 275| Target: Rs 230| Return: 12 percent

For the last one-year, the stock has been in a downtrend forming lower tops and lower bottoms on the daily chart. The recent bounce in the stock has been facing resistance around its 89-day exponential moving average and is trading below it.

In Monday’s session, the stock has closed below its short-term rising support trend line connecting lows of Rs 220 and Rs 254. The RSI and MACD line have given negative crossover with their respective averages suggesting resumption of the downtrend in the stock.

Thus, the stock can be sold at current levels and on the rise towards Rs 266 with a stop loss above Rs 275 and a target of Rs 230.

Repco Home Finance Limited: Sell| LTP: Rs 326| Stop loss: Rs 340| Target: Rs 295| Return: 10 percent

The stock is in a long-term downtrend forming lower tops and lower bottoms on the weekly chart. The recent bounce has seen a reversal from the 50-day moving average and has resumed downtrend.

MACD line after giving a negative crossover with its average has moved below the equilibrium level on the daily chart. Thus, the stock can be sold at current levels and on the rise towards Rs 330 with a stop loss above Rs 340 and a target of 295.

The author is Head of Technical and Derivatives at 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.

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First Published on Dec 11, 2018 11:21 am
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