Ashish Chaturmohta
Sell-off in the market continued as financial stocks hit by debt market pressure weighed on the equity market. The Nifty on Monday closed below the psychological level of 11,000 to settle at 10,967, down 1.6 percent.
The market breadth was negative with more than five stock declining for every advance on NSE. For the day index formed long bearish candlestick.
On the daily chart index has broken rising support trend line connecting lows of 9,952 and 10,558 which comes around 11,090 level and closed below it.
Immediate support for the market is at 10,855 which is the 50 percent retracement of the rise from 9,952 to 11,760 levels. This is also near Friday’s panic low of 10,866 levels suggesting market may see a bounce back if it holds above it. Breaking below this, the next support zone is at 10,640-10,550.
On the upside, resistance is seen in the 11,150-11,250 zone. In Nifty options, maximum open interest for Puts is seen at 11,000, while for Calls it is at 11,500 immediately followed by 11,200. A significant amount of Call writing was seen at 11,000, 11,100 and 11,200. Put unwinding was seen in the range of 11,000 to 11,300 and writing in 10,900 and 10,700 suggesting supports are shifting lower and upside is likely to be capped.
India VIX jumped 12 percent to 17.43 level which is a 20-month high. Thus, it is suggesting that volatility will remain in the market.
Here are five top stock trading ideas which can give good returns in the near term:
HCL Technologies: Buy | CMP: Rs 1,096 | Stop loss: Rs 1,060 | Target: Rs 1,200 | Return: 9 percent
The stock has seen major long-term consolidation between Rs 1,060 and Rs 700 levels for more than three years on monthly charts. After hitting an all-time high of Rs 1,108 in the month of April, the stock dropped to Rs 880 level in the month of June this year.
In the last four months, the stock has seen a strong U-shaped recovery. Holding above Rs 1,060, the stock is likely to see higher levels.
ADX line indicator of trend strength has moved above equilibrium level of 20 on weekly chart. Relative strength index has given positive crossover with its average on daily chart. Thus, stock can be bought at current level and on dips to Rs 1,080 with stop loss below Rs 1,060 for target of Rs 1,200.
Repco Home Finance: Sell | CMP: Rs 433 | Stop loss: Rs 455 | Target: Rs 370 | Return: 17 percent
The stock has been trading above Rs 500 on the lower side and Rs 900 level on the upside for almost three years. Last week, it witnessed breakdown below support zone indicating major topping out pattern in the stock.
Breakdown has been on long bearish candlestick and high volumes indicating selling pressure in the stock. Its price has given breakout from Bollinger band with the expansion of band and closed below lower band indicating the continuation of trend in the direction of breakout on daily and weekly charts.
Momentum indicators are in bearish mode on daily and weekly charts. Thus, the stock can be sold at current level and on rise to Rs 440 with stop loss above Rs 455 for target of Rs 370.
Larsen & Toubro Infotech: Buy | CMP: Rs 1,898 | Stop loss: Rs 1,800 | Target: Rs 2,100 | Return: 10 percent
The stock is in long-term uptrend forming higher tops and higher bottoms on daily and weekly charts. It witnessed breakout above resistance level of Rs 1,880 couple of weeks ago riding on high volumes and strong momentum.
The price has retraced back below the breakout on low volumes and small body candlestick which is typical of a stock in uptrend. Its price has managed to hold above the 50-day moving average which has worked in the past.
Relative strength index and Stochastic have given positive crossover with their respective averages on daily chart suggesting short-term correction is over. In the last couple of days, it has seen positive price action with volumes suggesting buying at lower levels.
Thus, the stock can be bought at current level and on dips to Rs 1,860 with stop loss below Rs 1,800 for target of Rs 2,100 level.
Ujjivan Financial Services: Sell | CMP: Rs 277 | Stop loss: Rs 295 | Target: Rs 230 | Return: 20 percent
The stock has been forming lower top pattern for more than two years. It had been holding above Rs 284 level which was broken on Monday to close at 28-month low.
Breakdown has been on long bearish candlestick and high volumes indicating selling pressure in the stock. Its price has given breakout from Bollinger band with expansion of band and closed below lower band indicating a continuation of the trend in the direction of breakout on daily and weekly charts.
Momentum indicators are in bearish mode on daily and weekly charts. Thus, the stock can be sold at current level and on rise to Rs 282 with stop loss above Rs 295 for target of Rs 230.
GAIL (India): Buy | CMP: Rs 381 | Stop loss: Rs 360 | Target: Rs 450 | Return: 18 percent
The stock has witnessed consolidation between Rs 390 and Rs 300 levels over the last nine months. For the last couple of months, it has been consolidating in 40-point range below the breakout. Thus, the stock has formed bullish cup handle bottoming formation on weekly chart and is trading at breakout levels.
The stock has taken support at 50-day moving average on daily chart which has acted as support in the past. The stochastic oscillator has given positive crossover with its average on weekly chart. MACD line on daily chart has moved above the equilibrium level of zero. Thus, the stock can be bought at current level and on dips to Rs 375 with stop loss below Rs 360 for target of Rs 450.
Disclaimer: The author is Head Technical And Derivatives at Sanctum Wealth Management. The views and investment tips expressed by investment experts on moneycontrol.com are their 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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