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'Nifty approaching towards 11,980, minor dips could be buying opportunity'

The new short term base is now emerging at 11,700 level and until we are trading it, buying on dips will remain the prudent strategy for traders.

October 31, 2019 / 10:28 AM IST
 
 
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As expected, bulls have taken the rally forward. The Nifty50 was facing strong resistance in the zone of 11,700-11,720 since July 2019 which has now been traded on the higher side. This breakout suggests that bulls are likely to continue and gradually we could approach towards 11,980 and 12,050. The new short-term base is now emerging at 11,700 level and until we are trading it, buying on dips will remain the prudent strategy for traders.

On the monthly chart, prices formed a bullish candlestick pattern after testing the rising channel support line. RSI is trading with reverse divergence in a bullish zone indicating that upmove is likely to continue further. The weekly chart is also indicating that traders should hold on to their long positions with the trailing stoploss of Rs 11,700. After breaking out of trendline resistance, prices have retraced till the support level and now again moving upward, this pattern is called reversal after retracement and often results in a strong move.

Average Directional Index (ADX) on the daily chart is eventually providing a signal that trend following buying is shaping up and any minor dips should be taken as buying opportunity.

Here is the list of three stocks which could fetch 5-8 percent return in the short-term:

Close

Maruti Suzuki: Buy | Target: Rs 7,930 | Stop loss: Rs 7,400 | Return: 5 percent

The stock has retraced after breaking out and falling in the category of reversal after retracement. Taking the previous week range in consideration, the counter has retreated till 23.6 percent Fibonacci level and now likely to offer fresh up move again. Momentum indicators on the daily chart are trading in a bullish zone. Weekly RSI is providing a buy signal for the first time in 2019. Traders can initiate the long positions in the counter for short term gain.

Asian Paints: Buy | Target: Rs 1,930 | Stop loss: Rs 1,790 | Return: 6 percent

The stock is on the verge of breaking out. After consolidating for about a month, the up move is building up in the counter. Short-term moving averages have been through the stage of convergence and now moving upward. RSI is trading in the bullish zone and indicating that fresh upside is likely.

Intraday charts are also indicating that bulls are having an upper hand and traders can go long in the counter for short term gain.

Bharat Electronics: Buy | Target: Rs 128 | Stop loss: Rs 112 | Return: 8 percent

Inverse Head and shoulder formation on daily chart suggesting that fresh up move is expected in the counter. Prices are trading above all major short term and medium-term moving averages.

ADX is trading with positive slope and indicating that stock has entered in a trending zone. RSI has taken support at an important support level and now again moving upward. Traders can initiate long position at CMP and on any dip till 115 to take advantage of short term momentum.

Disclaimer: 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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Moneycontrol Contributor
first published: Oct 31, 2019 10:28 am
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