Ashish Chaturmohta
Markets opened on the positive note on October 23 but failed to sustain its gains. The Nifty was rangebound for most of the session and slipped in the last hour of trade.
The index closed at 10,245, down by 0.5 percent for the day. Broader indices - BSE Mid and Small cap lost 0.7 percent and about 2 percent respectively for the day. Market breadth was almost 3:1 in favour of declines on NSE.
The bounce back from low of 10,138 hit high of 10,718 and witnessed reversal from 21-day exponential moving average. Monday's decline has formed long bearish candlestick for the day, suggesting the market is likely to test low of 10,138 which is the immediate support level. Breaking below this next support level will take it to 9,952 which is the March low.
On the upside 10,490-10,550 zone is going to act as resistance for the market.
In Nifty options, maximum open interest for Puts is seen at strike price 10,000 followed by 10,200; for Calls it is seen at strike price 11,000 followed by 10,500. Call writing was seen at strike prices 10,300, 10,400 and 10,500, while Put writing was at 10,200.
India VIX closed down by 8 percent to 21.36 which is a two and half year high. VIX could rise further towards 24-25 levels indicating markets will remain under pressure.
Here are the top stock trading ideas which can give good returns in the near term:
Aurobindo Pharma: Buy | CMP: Rs 759 | Stop loss: Rs 725 | Target: Rs 850 | Return: 12 percent
The stock has formed major double bottom formation between Rs 800 and Rs 500 odd levels on the weekly chart. Last month, it hit high of Rs 827 on strong volumes indicating buying participation in the stock. Since then the price has corrected down to Rs 730-720 levels on below-average volumes indicating long positions holding onto the stock.
The price has retraced 38.2 percent Fibonacci retracement level of the major rise from Rs 527 to 827 and consolidating above it. For the last four weeks, it has been rangebound between Rs 790 and Rs 720 and consolidating its gains. Thus, the stock can be bought at the current level and on dips to Rs 745 with a stop loss below Rs 725 for a target of Rs 850.
Colgate Palmolive (India): Buy | CMP: Rs 1,125 | Stop loss: Rs 1,075 | Target: Rs 1,250 | Return: 11 percent
The stock hit an all-time high of Rs 1,282 and since then has been in decline mode. It hit low of Rs 1,018 earlier this month and witnessed bounce back to current level.
The stock has seen a reversal from strong support of Rs 1,020 where previous swing lows have been seen. The up move has been on good momentum indicated by long bullish candlestick and above average volumes. The price has crossed and closed above 38.2 percent (Rs 1,119) Fibonacci retracement of the decline from Rs 1,282 to Rs 1,018.
Relative strength index has moved above 50 levels on the daily chart. Thus, the stock can be bought at current level and on dips to Rs 1,105 with a stop loss below Rs 1,075 for a target of Rs 1,250.
IndusInd Bank: Sell | CMP: Rs 1,449 | Stop loss: Rs 1,520 | Target: Rs 1,300 | Return: 11 percent
The stock is in decline mode forming lower tops and lower bottoms for the last three months on the daily chart. The decline had managed to find support around Rs 1,550 and saw small bounce back towards Rs 1,696. It found resistance at 20-day moving average and witnessed reversal down.
On Monday, the stock broke the critical support level with long bearish candlestick and high volumes. The price has given breakout from Bollinger band with an expansion of band and closed below lower band indicating the resumption of downtrend on the daily chart.
MACD line has given negative crossover with its average below equilibrium level of zero. Thus, the stock can be sold at the current level and on rise to Rs 1,475 with a stop loss above Rs 1,520 for a target of Rs 1,300.
Ujjivan Financial Services: Sell | CMP: Rs 224 | Stop loss: Rs 235 | Target: Rs 200 | Return: 12 percent
The stock is in decline mode forming lower tops and lower bottoms for the last six months on the daily chart. For the last three weeks, the stock has been trading in a range of Rs 265 and Rs 222 and has formed bearish pole and flag pattern on the daily chart.
On Monday, the stock hit a fresh low of Rs 221 and closed at a new low for the decline. Relative strength index has given negative crossover with its average on the daily chart. Thus, the stock can be sold at the current level and on rise to Rs 228 with a stop loss above Rs 235 for s target of Rs 200.
UltraTech Cement: Sell | CMP: Rs 3,463 | Stop loss: Rs 3,550 | Target: Rs 3,100 | Return: 12 percent
The stock is in decline mode forming lower tops and lower bottoms for the last three months on the daily chart. In the last couple of sessions, the stock has witnessed sell-off characterised by heavy volumes and has closed below the critical support of Rs 3,556.
On Monday, it formed long bearish candlestick and closed at 21-month low. Price has closed below lower Bollinger band suggesting continuation of the decline in the stock.
Momentum indicators are in bearish mode on daily as well on the weekly chart. Thus, the stock can be sold at the current level and on rise to Rs 3,400 with a stop loss above Rs 3,550 for a target of Rs 3,100.
Disclaimer: The author is Head of 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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