If the market starts to trade below 11,340 levels, Ashish Chaturmohta of Sanctum Wealth Management expects profit booking towards 11,200-11,170, which is a major support level
Sanctum Wealth Management
The domestic equity market got off to a weak start on Monday as Turkey’s economic crisis sparked contagion fears, which sent emerging market currencies to multi-year lows. The Nifty closed Monday at 11,356 levels, down 0.65 percent for the day.
On the weekly chart, the index touched a rising channel connecting lows (9,959-10,558) and highs (10,929-11,495). After forming a ‘Small Bodied’ candlestick on the weekly chart, the index has seen a gap-down opening on the daily chart as well.
If the market starts to trade below 11,340 levels, we expect profit-booking towards 11,200-11,170 levels, which is a major support level. On the upside, a break above 11,415 levels can see the index test 11,500 levels. In Nifty options, maximum put open interest is placed at 11,000 strike, followed by 11,200 strike. For calls, the same is placed at 11,500 strike.
Call writing was seen in 11,400 and 11,500 strike, while unwinding was seen in 11,400 and 11,300 puts. Some writing was seen in 11,200 put, suggesting support at 11,200 and resistance at 11,500. India VIX closed at 13.4 and is seeing consolidation at lower levels. A break above 13.5 could lead to profit-booking in the market.
Here is a list of top five stocks which could return 9-15% in the next 1-2 months:
United Breweries: Buy| CMP: Rs 1,298 | Stop loss: Rs 1,240 | Target: Rs 1450 | Return: 12%
The stock formed a major bullish cup and handle bottoming out the pattern on the monthly chart over the three-year period. On the weekly chart, the stock has formed a bullish inverted head and shoulders pattern over the last nine months.
The decline in the month of June and July has taken support at 200-day moving average and price has rallied from the average to close at breakout level.
In Monday’s session, the stock has seen a strong momentum and high volumes action indicating buying participation in the stock. Price has given breakout from Bollinger band on the upside with the expansion of band on daily chart suggesting a continuation of the rally.
The momentum indicators are in a bullish mode suggesting a breakout is likely to be on the upside. Thus, the stock can be bought at current level and on dips towards Rs 1,280 with a stop loss below Rs 1,240 for a target of Rs 1,450 levels.
Tata Elxsi: Buy | LTP: Rs 1415 | Stop loss: Rs 1365 | Target: Rs 1550 | Return: 9.5%
The stock is in a long-term uptrend forming higher tops and higher bottom formations on its weekly chart. The stock touched a high of Rs 1,491 couple of weeks back and has slowly seen a correction towards Rs 1,375 levels.
After four days of consolidation, the stock is showing signs of breakout on the upside. The price has moved above the 21-days exponential moving average that has acted as a support for the stock in the past.
The Relative Strength Index (RSI) has given a positive crossover with its average on the daily chart suggesting a short-term correction and resumption of the uptrend. Thus, the stock can be bought at current level and on dips to 1400 with a stop loss below Rs 1365 and a target of Rs 1550 levels.
Infosys: Buy| LTP: Rs 1409 | Stop loss: Rs 1360 | Target: Rs 1620 | Return: 15%
The stock has been in an uptrend for the last one year forming higher tops and higher bottoms. After witnessing a breakout above its previous all-time of Rs 1278, the stock tested the breakout level and seen continuation of the uptrend since then.
The price witnessed a short-term consolidation of two weeks which eventually led to a breakout to close at a new all-time high. The stock continues to hold above 21-day exponential moving average and heading higher.
The price has given a breakout from the Bollinger band on the upside with the expansion of band on daily chart suggesting a continuation of the rally.
The daily MACD line given positive crossover with its average and moved above the equilibrium level. Thus considering the above evidence, the stock can be bought at current level and on dips to Rs 1395 with a stop loss below Rs 1360 and a target of Rs 1620 levels.
Nestle India: Buy| LTP: Rs 10851 | Stop loss: Rs 10450 | Target 12000 | Return: 11%
The stock has been in an uptrend forming higher tops and higher bottoms on daily chart since its breakout from major consolidation pattern at Rs 8000 odd levels in the month of April this year.
The stock has been moving along the 21-day exponential moving average and heading higher. The weekly MACD has given a positive crossover with its average. Thus, the stock can be bought at current level and on dips to Rs 10750 with a stop loss below Rs 10450 for the target of Rs 12000 levels.
Larsen & Toubro Infotech: Buy| LTP: Rs 1724 | Stop loss: Rs 1660 | Target 1900 | Return: 10%
The stock is in a long-term uptrend forming higher tops and higher bottoms on the weekly charts. For the last five weeks, the stock has been consolidating between Rs 1880 and Rs 1650 odd levels.
For the last seven sessions, it has been trading at the lower end of the range. Also, the stock is currently trading at a 50-day moving average which has been acting as support for the price and heading higher.
Hence, the stock is trading at important support levels. The daily Stochastic has given positive crossover with its average. Thus, the stock can be bought at current level and on dips to Rs 1700 with a stop loss below Rs 1660 for a target of Rs 1900 levels.Disclaimer: The author is Head of Technical and Derivatives at Sanctum Wealth Management. 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.