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Majority of stocks showing fresh breakouts! 5 stocks which can give up to 8% return

The market is now clearly momentum-driven. When such a market assumes center stage, focusing on upside targets is not advisable.

July 14, 2017 / 08:13 AM IST
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Todays L/H

Pritesh Mehta

IIFL Private Wealth

A break above 9,700 and renewed buying interest in Bank Nifty has brushed aside the concerns of June’s steep fall from the peak 9,699.

The market’s focus has turned holistic with midcap and smallcap staging rallies of 6 and 7 percent, respectively from their recent lows. Both indices are trading below the May 2017 peak.

Within these spaces, majority of stocks are showing signs of fresh breakout and follow-up buying. The stock-specific action based on spotting pockets of strength is hence an ideal approach in the current scenario.

The market is now clearly momentum-driven. When such a market assumes center stage, focusing on upside targets is not advisable. The uptrend could either travel more than anticipated or could witness abrupt supply pressure at higher levels (which is not ruled out).


However, till correction happens; or telltale signs of exhaustion become visible, traders can gainfully ride the current up move.

Top five stocks which can give up to 7-8% upside in short term:

Power Grid: BUY | Target: Rs230 | Stop Loss: Rs208 | Return: 7%

Forming series of higher high and higher low, the stock has been trading in a secular uptrend. During the corrective decline, the stock has a tendency of taking support near its 21-week EMA levels. The Bulls outstripped bears near this EMA to keep overall

price structure healthy.

The recent price structure shows positive breakout at an uncharted zone which indicates a resumption of the prevailing uptrend.

The RSI on the daily chart surpassed previous peak levels, thereby confirming momentum on the upside. Based on above-mentioned parameters, we recommend a buy on Power Grid above Rs215 with a stop loss of Rs208 and a target of Rs230

Biocon: BUY| Target Rs391| Stop Loss Rs352| Return 7%

The positive breakout from the consolidation phase after a sharp decline suggests exhaustion of selling pressure and renewed buying interest. Back in April 2017, it had made a peak of Rs402 and went through a sharp correction, unable to sustain above the

midpoint of gann channel.

However, it took support at its 48-weekly EMA and began a process of consolidation. This critical support is in place since 2016, thereby providing opportunities to buy on every decline.

Improved relative strength following a phase of base-building at the bottom warrants positive outlook for the stock.

The pattern of consecutive higher highs and higher lows on the weekly time frame above the midpoint of current gann channel suggests a reversal.

Keeping in mind, above mentioned parameters, we recommend a buy on Biocon above Rs365 with a stop loss of Rs352 and a target of Rs391.

GRUH Finance: BUY| Target Rs550| Stop Loss Rs493| Return 8%

The steady move above most of the important averages has ensured bullish price setup on long term charts. The stock has been consistently outperforming to a broader market by charting into the uncharted zone.

The recent price structure shows series of higher high and higher low chart pattern and positive break out of ‘Flag’ chart formation.

The rally from Rs480 levels was accompanied by comparatively higher volumes; hence, based on above-mentioned observations, we recommend a buy on GRUH above Rs508 with a stop loss of Rs493 and a target of Rs550

Indiabulls Housing Finance: BUY| Target Rs1204| Stop Loss Rs1086| Return 7%

The sustenance above the long-term averages and series of rising high indicates healthy long term structure. Recently, the stock had experienced 12 percent correction from its all-time high of Rs1,187; however, forming base near Rs1,050 renewed buying interest emerged to keep overall outlook positive.

Moreover, the second line of defense as per gann rule of 8 provided respite to the stock which was followed by breakout past the descending trend line.

Important support is now emerging at Rs 1,090. Based on above observations we recommend a buy on Indiabulls Housing Finance above Rs 1,125 with a stop loss of Rs 1,086 and a target of Rs 1,204.

Capital First: BUY| Target Rs803| Stop Loss Rs724| Return 7%

Forming multiple lows near Rs650 in the past few months, the stock prices managed to defend its March’2017 low of Rs627.

Recently, it broke above the downward slanting trendline, also it managed to surpass upper boundaries of the recent consolidation phase.

With the appearance of the bullish bodied candle on comparatively higher volumes, important support is now placed at Rs330. Sustaining above for the same could keep near-term outlook positive.

Based on above observations we recommend a buy on Capital First above Rs750 with a stop loss of Rs724 and a target of Rs803.

Disclaimer: The author is Head of Technical Research at IIFL Private Wealth. The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Pritesh Mehta is a Lead Technical Analyst - Institutional Equities at YES Securities. He holds a Master's degree from NMIMS. Prior to this assignment, he was associated with IIFL for 13 years as one of their lead technical analysts. His skills and forte include in-depth technical analysis and identifying actionable momentum trades. Pritesh excels in trend identification, with a special focus on inter-market analysis, gann & ratio charts.

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