After consolidating in the range of 13,400-13,600 for few sessions, benchmark index Nifty50 decisively traded higher confirming a new impulse wave in progress. This is impulse wave 'V' and as per the characteristics it has the potential to inch towards 14,100 marks on the higher side. Also, Nifty continued flat bottom green Heikin-Ashi candle on weekly & daily time frame indicating the continuation of the bullish bias.
GANN square box placed at the 52-week low tag (7,511) is displaying immediate arc resistance standing around 14,200-14,500 zone which suggests current upmove has no major resistance till the mentioned upper boundary of the box. India VIX traded lower for the entire last week and closed below crucial strong supports. Below 19 levels volatility index has the potential to trade lower towards 15 mark indicating lower volatility in the coming week which is a positive sign for prices.
Although the majority of the oscillators & indicators are placed in overbought zones, early signs of a trend reversal will come only on a close below 5-day SMA (LOW) standing around 13,550 mark.
Bank Nifty
Bank Nifty gave rangebound movement in the last week but settled with positive weekly closing. Moreover, the banking index is trading above 5 DMA, 10 DMA, and an important moving average for short-term 20 DMA which suggests continued positive bias. Immediate support is standing around 30,200 and only a daily close below these levels will indicate correction. Nevertheless, the trading range for the banking index will be 29,500 on the lower side and 32,000 on the higher side for the upcoming week.
Here is the list of three stocks which could be bought for return up to 30 percent in the short term:
Bank of India: Buy Around Rs 50 | Target: Rs 65 | Stop Loss: Rs 43 | Upside: 30 percent
This counter appears to be consolidating in a larger band of Rs 49–55 for last few days and dips are getting bought into, hinting at some sort of accumulation at lower levels. We believe once this counter manages a sustainable close above Rs 50, it can witness a swift move towards its logical targets placed around Rs 65. Therefore, we advise positional traders to buy into this counter around Rs 50 levels. The stop loss suggested for the trade is close below Rs 43 mark.
Bajaj Auto: Buy Around Rs 3,350 | Target: Rs 3,650 | Stop Loss: Rs 3,200 | Upside: 9 percent
This stock is trading with higher high and higher low formations and it is expected to give Flag breakout on daily chart with decent volume. Bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 & 50 DMA's indicating strength. Key support lies at Rs 3,220-3,200 zone until this break decisively, long position can be held. Investors can take entry around Rs 3,350 levels with stop loss of Rs 3,200 on closing basis for the target of Rs 3,650.
Torrent Power: Buy Around Rs 325 | Target: Rs 355| Stop Loss: Rs 306 | Upside: 9 percent
The initial signal of trend reversal buying can be seen in the daily chart as it found support from its key moving averages of 20 DMA's on the daily chart. The momentum indicators have started trading in a bullish zone. On the weekly time frame, it formed a bullish candlestick pattern showing strong support at bottom levels. Positive crossover of medium-term moving averages also giving cues to take a long position in the stock. Traders can initiate buying at Rs 325 for the short term gain of Rs 355 with stoploss of Rs 306 mark.
(Shabbir Kayyumi is the Head of Technical Research at Narnolia Financial Advisors Ltd.)
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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