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Last Updated : Jun 18, 2020 12:08 PM IST | Source: Moneycontrol.com

Momentum plays: 5 stocks that could give over 10% return in 1-3 months

On the upside, the Nifty index has resistance zone at 10,050-10,135 which needs to be taken out for the market to rally towards 10,500 levels.

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Ashish Chaturmohta

Markets have been volatile for the last few days, and June 17 was no different with 100 points swing on either side. Nifty finally settled at 9,881 down by 0.33 percent for the day.

Broader market indices, BSE Midcap and Smallcap, outperformed benchmark indices with a gain of 0.32 percent and 0.71 percent, respectively, for the day.

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The market breadth on NSE was in favour of bulls with an advance-decline ratio of 5:4.

Nifty witnessed reversal from its 100-Day moving average (DMA) at 10,327, and Friday’s gap opening found support at 9,544 where rising support trend line connecting lows of 7,511-8,807.

Though the index has bounced back, it has largely been moving in a range of 10,050 and 9,700-odd levels. A break below 9,700 can extend the decline to 9,544 levels.

And, below 9,544 would confirm resumption of the downtrend which could take the market towards 9,250 and 9,000 levels.

On the upside, the index has resistance zone at 10,050-10,135 which needs to be taken out for the market to rally towards 10,500 levels.

Here is a list of top 5 stocks that could give 10-19% return in the next 1-3 months:

Biocon Ltd: Buy| LTP: Rs 396| Stop Loss: Rs 375| Target: Rs 460| Upside 16%

The stock has formed a bottom between 360 and 210 odd levels over a period of 20-months. In the April month, the stock witnessed a breakout from the base with strong momentum and high volumes to hit a new all-time high.

For the last couple of weeks, the stock has been consolidating in a narrow range between 400 and 378 odd levels before the next leg of uptrend could begin.

The stock has formed a bullish pole and flag continuation pattern on the daily chart and is showing signs of a breakout on the upside.

The Relative Strength Index and Stochastics have given a positive crossover with their respective averages on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 390 with a stop loss below Rs 375, and a target of Rs 460 levels.

Maruti Suzuki India: Buy| LTP: Rs 5726| Stop Loss: Rs 5400| Target: Rs 6700| Upside 17%

The stock was in decline mode from the high 10,000 odd to low of 4,000 in March. It retested the low in early April and then bounced back to current levels. It has been forming higher lows indicating buying coming at higher levels.

Volumes have remained high that indicates accumulation at lower levels. The recent correction from 5850 has taken support at its 21-Days exponential moving average (EMA).

Wednesday’s bullish body candle and high volumes suggest that the stock is likely to see the start of an uptrend. Thus, the stock can be bought at current levels and on dips towards 5650 with a stop loss below 5400, and a target of 6700 levels.

LIC Housing Finance: Buy| LTP: Rs 292| Stop Loss: Rs 278| Target: Rs 335| Upside 14%

The stock witnessed a sharp fall from the high of 483 in January to 185 levels. After hitting a low of 185 in March, the stock bounced back to 297 odd levels.

Then the price corrected towards 219 levels to form a higher low and then rallied back to current levels. The stock is currently trading at the breakout level and is showing signs of a breakout on the upside.

The price has given a breakout on the upside from the Bollinger Band with the expansion of bands on a daily chart indicating continuation of the trend in the direction of the breakout.

MACD has moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards 287 with a stop loss below 278, and a target of 335 levels.

Hindustan Petroleum Corp: Buy| LTP: Rs 214| Stop Loss: Rs 204| Target: Rs 245| Upside 14%

The stock has seen a decline from the high of 328 to a low of 160 odd levels. For the last three months, the stock has witnessed a consolidation between 230 and 160 odd levels. It has formed a double bottom reversal pattern on the daily chart.

Volumes were above average compared to the historic average and higher than the declining phase indicating accumulation at lower levels.

Relative Strength Index and Stochastics have given positive crossover with their respective averages on the daily chart. Thus, the stock can be bought at current levels and on dips towards 210 with a stop loss below 204, and a target of 245 levels.

Chambal Fertilizers & Chemicals: Buy| LTP: Rs 142|Stop Loss: Rs 134| Target: Rs 170| Upside 19%

The stock witnessed a sharp fall from the high of 185 to a low of 94 in the months of February and March. Since then price has rallied back to 140 levels.

For the last couple of months, it has been trading in a range of 140 and 125 odd levels and consolidating. Volumes were high indicating accumulation in the stock.

Now, the price has given a breakout on the upside from Bollinger Band with the expansion of bands on the daily chart indicating a continuation of the trend in the direction of the breakout.

The Average Directional Index (ADX) line, is moving up from an equilibrium level of 20 with a rising Plus Directional line on the daily chart. Thus, the stock can be bought at current levels and on dips towards 139 with a stop loss below 134, and a target of 170 levels.

(The author is Head of Technical and Derivatives, Sanctum Wealth Management)

Disclaimer: 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.
First Published on Jun 18, 2020 12:08 pm
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