Bulls managed to maintain an upper hand in a volatile trade week ended February 14. The Nifty is trading above its crucial zone of 12,000 and 61.8 percent Fibonacci retracement suggests bulls shall remain in charge.
Nifty is trading above its important moving averages 20 DMA/50 DMA/200 DMA which shows strength in the index and bullish bias to continue further. At the same time, upward tick of %K & %D of stochastic oscillator suggests bullish momentum in the weekly time frame. Moreover, positive hidden divergence in stochastic oscillator implies the possibility of a higher journey towards previous swing high (12,390).
At the same time, the recent formation of inverse head and shoulders pattern will give a breakout on a close above 12,160 levels which is having target of 12,550 mark, also adding the conviction of buy on dip strategy. A significant open interest of more than 35 lakh in 12000PE is adding conviction of a strong base around 12,000 for Nifty.
The downside is more in the Bank Nifty, where during the last week it formed a bearish candlestick. The major support for Bank Nifty is around 30,200.
Here is the list of three stocks which could return 5-16 percent in short term:
Birla Corporation: Buy Around Rs 715 | Target: Rs 800 | Stop Loss: Rs 675 | Upside: 11 percent
The scrip pulled back from a low of Rs 574 to rise to a high of Rs 807 before consolidating. This pullback rally and consolidation has taken the form Pole & Flag pattern from last few days.
Currently, it is waiting for the breakout on upside so that it can accelerate buying momentum further. An emerging line of polarity on the daily chart is suggesting bullish momentum in the scrip. Indicators and oscillators also are showing a conducive scenario in the coming sessions. Based on the mentioned technical structure one can go long in the scrip around Rs 715 for the target of Rs 800 mark with a stop loss of Rs 675.
MphasiS: Buy Around Rs 890 | Target: Rs 940 | Stop Loss: Rs 868 | Upside: 5 percent
The momentum indicator MACD has crossed the signal line indicating a start of a trend. The RSI too is above its key 50 mark indicating positive momentum on its side. The stock is on the verge of breaking out falling channel with the weekly bullish candle, all indicating to further bullishness going forward. The crucial resistance of the 50 EMA has been recently taken off which indicated short term momentum to the uptrend. We recommend a buy in MphasiS around Rs 890 with a stop loss of Rs 868 and aim for a target of Rs 940.
Tata Steel: Buy Around Rs 420 | Target: Rs 490 | Stop Loss: Rs 382 | Upside: 16 percent
In the past few days, RSI had given a breakout by trading above 50 levels from below and made a high of 74 then after is retraced towards centerline placed at 50 levels, this behavior is called RSI PBB set up.
RSI PBB is pullback buy setup which indicates, once RSI turns its tail upside from a zone of 45-55 levels, the target is previous swing high of RSI which was 74. Currently, Tata Steel is going through this setup and we expect higher price movement towards near previous high of Rs 490. We recommend a buy in Tata Steel around Rs 420 with a stop loss of Rs 382 and aim for a target of Rs 490.
(The author is Head of Technical Research at Narnolia Financial Advisors Ltd.)
Disclosure: Narnolia Financial Advisors/Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks. The stocks recommended are based on our analysis which is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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