Ashish Chaturmohta
The markets opened positive but failed to sustain above 10,600 levels and witnessed a steady decline throughout the day on November 12. The Nifty closed at 10,585 levels down by 0.97 percent for the day. The market breadth on NSE was negative with 3 stocks advancing for every five declines.
The broader market indices such as BSE Midcap and Smallcap lost by about 0.91 percent and 0.83 percent, respectively. The Nifty has been facing resistance above 10,600 levels and was not able to sustain above it.
The immediate support on the downside is seen at 10,440 levels. Now, a break below this level will result in a decline towards 10,260, and further towards 10,030 levels.
On the upside, the index needs to cross and sustain above 10600 for the bounce back to continue towards 10750-10850 levels. Here, 200-day moving average and October 4 falling gap area will act as resistance for the market.
In the Nifty options, maximum open interest (OI) 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 10,700.
Call writing was seen in 10,600 to 11,000 and some Put unwinding was seen in 10,600 to 10,000 levels. Options data suggests that upside remains capped and the market may drift lower.
India VIX jumped by 9 percent to 19.37 levels after cooling off seen in last few weeks. A further rise in VIX is likely to put pressure on the markets. It needs to move below 17 for the market to move higher.
Here is a list of top five stocks which could give 8-16 percent return in the next 1 month:
Praj Industries: Buy| CMP: Rs 114.5| Stop Loss: Rs 108| Target: Rs 130| Return 14%
The stock touched a multi-year high of Rs 131 in the month January this year and corrected down to Rs 76-72 levels where it has formed double lows. The rally to current levels has formed a W-shaped bottoming out pattern on the weekly chart.
Volumes on up move have been high and on declines below average indicating buying participation and long positions which is holding onto the stock.
The Relative strength index (RSI) and Stochastic indicators have given a positive crossover with their respective average on the daily chart.
After the last couple of weeks of consolidation in a narrow range, the stock has resumed its uptrend with a long bullish candlestick and high volumes on the daily chart. Thus, it can be bought at current levels and on dips towards Rs 112 with a stop loss below Rs 108 and a target of Rs 130 levels.
Jubilant Foodworks: Buy| LTP: Rs 1,101| Stop Loss: Rs 1,040| Target: Rs 1,270| Return 15%
The recent fall in the stock has retraced 50 percent of the major rise from Rs 380 to Rs 1578 levels which comes at Rs 979 levels. Here, previous major swing highs and congestion zone supports are also seen indicating good value level for the stock.
The price has formed a bullish ‘Hammer’ candlestick pattern with long lower shadow at support level on the daily chart which indicates buying coming at lower levels.
On the daily chart, the Relative strength index and the price are showing positive divergence i.e. price is making lower lows while the indicator is making higher lows from the oversold levels on the daily chart.
Thus, the stock can be bought at current levels and on dips towards Rs 1085 with a stop loss below Rs 1040 and a target of Rs 1270 levels.
ICICI Bank: Buy| LTP: Rs 352| Stop Loss: Rs 338| Target: Rs 400| Return 13%
After touching an all-time high of Rs 365 in the month of January, the stock corrected to Rs 260 levels and recovered back to current levels. It has formed a W-shaped bottoming out formation on the weekly chart.
The stock has formed a pole and flag pattern which is a bullish continuation pattern below the breakout level on the daily chart.
The price is trading above its short-term as well as long-term averages. The momentum indicators are in bullish mode on the weekly chart. Thus, the stock can be bought at current levels and on dips to Rs 348 with a stop loss below Rs 338 and a target of Rs 400 levels.
Vedanta: Sell| LTP: Rs 203| Stop Loss: Rs 212| Target: Rs 175| Return 16%
The stock has formed a bearish inverted head and shoulders pattern on the daily chart between Rs 350 and Rs 200 odd levels. The price is trading below long-term moving averages and moved below 21-day exponential moving average which has been acting as resistance for the stock.
The Relative strength index has given a negative crossover with its average on the weekly chart. Thus, the stock can be sold at current levels and on rise to Rs 205 with a stop loss above Rs 212 and a target of Rs 175 levels.
Hero MotoCorp: Sell| LTP: Rs 2,839| Stop Loss: Rs 2,960: Target: Rs 2,600| Return 8%
The stock has been in a declining mode forming a lower top and lower bottom for the last one year. The recent bounce back from the lows has run into 50-day moving average resistance.
The price has formed a bearish engulfing candlestick pattern on the daily chart. The Relative strength index and Stochastic indicator have given negative crossover with their respective averages on the daily chart.
Thus, the stock can be sold at current levels and on the rise towards Rs 2900 with a stop loss above Rs 2960 and a target of Rs 2600 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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