Nifty could see a bounce back; here’s why OIL & BPCL can return up to 7%

The Nifty has strong support placed around 10,800 levels, which is the lower band of the upward rising channel formation in which it has been trading for many weeks.

It has been trading with a strong support placed at its 50-week moving average (10,690) and 21-week moving average (11,060), which suggests a positive trend for the time being.

After breaking down from the lower band of its upward rising channel formation on the daily chart, the Nifty plunged more than 750 points and has given a close below its 50-day moving average (11,342) which indicates a downside movement on a smaller timeframe.

Q: Do you think we can slip further from these levels? If yes, where is the crucial support placed?
A: We see strong support for the Nifty at 10,748. On the weekly chart, the relative strength index touched 53.89 with a negative crossover. It has strong support from its upward rising trend line, which hints at a bounce back. Based on the above structure, we can say that the Nifty has room for a downside, but with respect to the ratio it has more room for a rally on the upside.

The long term trend will depend on a monthly closing as it seems that the Nifty is forming a Black Marubozu candlestick, which is a bearish reversal indication. If that happens, we may witness a healthy correction.

Q: Three stocks which investors can look at this week with a minimum holding period of 1 month? A: OIL: LTP: Rs 218| Buy at Rs 218.65-216.50| Stop loss: Rs 209| Target: Rs 235| Return: 8% On the daily chart, the stock has given a breakout from its Symmetrical Triangle formation with above average volumes. This indicates a robust upside movement in the counter. Moreover, the stock has managed to close above its 21 and 50-day moving average which shows a positive trend in the stock.

On the weekly chart as well, the stock has sustained above its 200-week moving average placed at Rs 214.50, which suggests a move on the upside.

Daily momentum indicator RSI stands at 65.49 level with a positive crossover. The RSI has given a breakout from its downward falling trend line, which points to a positive breath in the stock.

BPCL: LTP: Rs 375| Buy: Rs 376.50| Stop Loss: Rs 348| Target: Rs 390-403 | Return: 7% On the daily chart, the stock has given a breakout from its inverse head and shoulder pattern, which suggests positive momentum can be seen in the near future.

On the daily chart, the stock is trading above its 20 and 50-day moving averages, which shows dominance of the stock.

Momentum indicator RSI is at 58.09 with a positive bias. Positive divergence has been observed which is a sign of optimism.

Bharti Infratel: LTP: Rs 279.90| Buy: Rs 281.20| Stop loss: Rs 263.20 | Target: Rs 320| Return: 14% On the daily chart, the stock has given a breakout of its rounding bottom, which suggests positive momentum can be seen in the near future.

Moreover, the stock is trading above its 20-day moving average which shows dominance of the stock. On the momentum indicator MACD, the signal line has given a breakout above MACD, which suggest optimism.

Q: What is your view on small and midcap stocks? A: Midcap and smallcap indices corrected around 10-15 percent from their 1-year high. Most small and midcap stocks corrected over 20-30 percent from their highs.

We are of the view that volatility in the market is likely to remain in the short term due to macro concerns and coming state and general elections.

Investors should remain stock-specific rather than sector-specific and invest only in attractively priced fundamentally strong mid- and smallcap stocks.

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.