Ashish Chaturmohta
Sanctum Wealth Management
The market continued its positive momentum with the Nifty closing at a record high of 11,356 on Tuesday. The market breadth was positive with almost two advancing stocks for every decline on the NSE. On an intraday basis, we did see the index dip into the negative, but the same got bought into and it went on to hit new highs. Thus, investors can use the declines to buy into for higher levels.
As long as the Nifty holds above 11,260 levels, we expect the index to head towards 11,470 levels, with immediate resistance placed at 11,400 levels. A break below 11,260 levels may see the market test the breakout gap area of 11,210-11,170, which will now act as support.
In Nifty options, maximum put and call open interest stands at 11,000 and 11,500 strikes, respectively. Put writing was seen at 11,200 and 11,300 strikes, which suggests that supports are shifting higher. Call writing was seen at 11,600 strikes.
India VIX is currently placed at 12.58 levels, which is turning up from support levels and could act as a damper for the market. The outcome of the Monetary Policy Committee and Federal Open Market Committee meeting will be in focus in trade today.
Here is a list of five stocks that could return 9-22 percent in next 1-2 months:
Mahindra & Mahindra: Buy| LTP: Rs 933| Stop loss: Rs 900| Target: Rs 1050| Return: 12.5%
The stock has been in an uptrend forming higher tops and higher bottoms for the last ten months. After hitting a high of Rs 933 couple of months ago, the stock has been trading sideways in a range between Rs 935 and Rs 880 odd levels.
It has been consolidating its gains at all-time highs and formed a base for the next leg of the up move. The recent lows have taken support at 50-day moving average (DMA) which has acted as support and resistance in the past. The stock can be bought at current level and on dips to Rs 925 with a stop loss below Rs 900 and a target of Rs 1,050 levels.
L&T Finance Holdings: Buy| LTP: Rs 176| Stop loss: Rs 167| Target: Rs 210-215| Return: 22%
After witnessing a major rally from lows of Rs 81 levels to an all-time high of Rs 214 levels, the stock went into a correction mode. It retraced more than 50 percent of the up move to touch low of Rs 140 couple of weeks back.
The rally from the lows has been on a strong momentum indicated by long bullish candles and high volumes on the weekly chart.
The stock has formed a double bottom pattern on the weekly chart and is now trading below the breakout level. The price has moved above the long-term 200-day moving average suggesting corrective phase is over and change in long-term trend.
The relative strength index (RSI) and Stochastic have given a positive crossover with their respective average on the weekly chart suggesting that the stock has resumed its uptrend.
Thus, the stock can be bought at current levels and on dips to Rs 173 with a stop loss below Rs 167 for a target of Rs 210-215 levels.
Godrej Industries: Buy| LTP: Rs 648| Stop loss: Rs 610| Target: Rs 750| Return: 15%
The stock has been in a long-term uptrend forming higher tops and higher bottoms on the weekly and monthly charts.
It hit an all-time high of Rs 699 in July last year and since then it has been in a corrective mode. The stock declined towards Rs 512 levels and has been trading in a range with upside capped at Rs 650 levels.
This consolidation has formed a bottoming pattern with progressively higher lows and now closed near the breakout levels. The price has given a breakout from the Bollinger Band on the upside with the expansion of band suggesting the stock is likely to see a breakout from the pattern and move higher.
The weekly MACD line after moving above equilibrium level has taken support at its average and turned up. Thus, the stock can be bought at current level and on dips to Rs 635 with a stop loss below Rs 610 and a target of Rs 750 levels.
Exide Industries: Buy| LTP: Rs 279| Stop loss: Rs 260| Target: Rs 325| Return: 16%
The stock has formed a rounding bottom pattern over a period of one year between Rs 250 and Rs 195 odd levels. At the start of the month of May, the stock witnessed a breakout from the base on huge volumes and price momentum.
Since then, the price has been trading in a range between Rs 270 and Rs 250 odd levels and is now consolidating above the breakout level for almost three months.
The price has closed at the breakout level on the daily chart. Weekly MACD line on the daily chart has moved above neutral level of zero suggesting consolidation phase is over.
Thus, the stock can be bought at current level and on dips to Rs 270 with a stop loss below Rs 260 for a target of Rs 325 levels.
Divis Laboratories: Buy| LTP: Rs 1146| Stop loss: Rs 1,120| Target: Rs 1,250| Return: 9%
After touching a high of Rs 1,223 in the month of May, the stock corrected down towards Rs 994 levels. The decline has seen a reversal above major support level of Rs 980.
The stock has formed a bullish inverted head and shoulders pattern on the daily chart. The pattern has taken support at its 200-day moving average after dipping below it.
The price has given a breakout from the pattern with strong momentum and high volumes. Daily MACD has given a positive crossover with its average above neutral level of zero.
Thus, the stock can be bought at current level and on dips towards Rs 1,145 with a stop loss below Rs 1,120 for a target of Rs 1,250 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.
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