The trend reversal point for Nifty is seen on close above 10,595 which is 23.6 percent retracement of 26th February to 28th August 2018 up move
Muted global trends and sell-off in the index heavyweights led Nifty50 lower for the fourth-straight session on October 23 and closed around its lowest level in the last six months.
The index has fallen around 600 points in the last four trading sessions from the recent high of 10,710 and on October 23 closed below 10,200.
The short-term trend is still negative because the index failed to sustain above its rising trendline by connecting the swing lows of 6,825, and 7,894. In terms of the Fibonacci retracement, the Nifty50 has continuously closed below 23.6 percent retracement of the 26th February to 28th Augusts’ up move.
The trend reversal point for Nifty is seen on close above 10,595 (23.6 percent retracement of 26th February to 28th August 2018 up move).
Until then, the market is likely to remain bearish and can slide further lower towards 9,950 (23rd March low) and 9,875 (38.2 retracements of 26th February to 28th August 2018 up move).
The Relative Strength Index (RSI) on the daily chart is 31.4 which is trading near oversold zone but with no divergence seen against price.
The MACD is continuously trading below the signal line, which indicates supply pressure to persist at higher levels. India VIX ended down by 10.86 percent to 19.03. However, it is still trading above its heedful mark of 18 which suggests a consolidate down move in the market.
Here is a list of top three stocks which could give 5-8 percent return in the next one month:
Capital First: Sell| Close: Rs 469.15| Target: Rs 442-436 | Stop loss: Rs 490 | Return: 5.8 percent
Capital First is consistently trading below its short and mid-term moving averages as well as below its 50 percent retracement levels of (9th October to 16th October 2018 up move) with higher volumes in daily scale. It indicates that the bias is likely to remain bearish for the next few trading sessions.
The RSI is trading at 37.18 which is in the neutral zone but no divergence can be seen against price and directional movement also indicates negative strength.
Based on the above observations, the stock is likely to fal in the near-term. A trader can sell the November future at current levels and add sell positions on some technical bounce around Rs 475-477 with a stop loss above Rs 490 (closing basis) for a target of Rs 442 and 436.
Oberoi Realty: Buy| Close: 394.55 | Target: Rs 430 and 456 | Stop loss: Rs 370 | Return: 9 percent
After consolidating around Rs 360-390, the stock has given a breakout on October 23 with higher volumes. The daily RSI shows positive momentum. MACD is trading below zero line but with positive crossover, which indicates that the stock has the potential to move higher.
Traders can buy the stock around current levels and add on dips around Rs 387-390 with a stop loss below Rs 370 (closing) for the target of Rs 430 and 456.
Indraprastha Gas: Sell| Close: 241.60 | Target: Rs 226 | Stop loss: Rs 252 | Return: 6.5 percent
The stock is consistently trading below its short and mid-term moving averages with higher volumes on the daily scale. The daily RSI is at 45.35, showing a bearish trend. The directional movement also supports negative strength.
A trader can sell the November futures contracts at current levels and add sell positions on some technical bounce around Rs 244-246 with a stop loss above Rs 252 (closing basis) for a target of Rs 226.
The author is Research Analyst at Guiness Securities.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are his own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.