Markets staged a staggering up move on June 20 amid short covering on the bourses.
The badly beaten down stocks like Jet Airways, Reliance Capital, Reliance Infra and DHFL hogged the limelight. More interestingly, the advance-decline ratio turned in the favour of the bulls which is a very pleasant development for the overall breadth of the market.
Index-wise, the Nifty formed a Bullish Engulfing Candlestick pattern on the daily chart. The move came after the index found support around its 50-DMA of 11,680 levels.
This may well be the first step towards a decent upswing which could take the Nifty higher around its next immediate resistance zone of 11,900-11,980 area. Crucial support is now upgraded to 11,700-11,740 zone.
Bank Nifty, on the other hand, has already broken out from a falling channel pattern and looks much impressive compared to the Nifty index.
If the index manages to surpass the immediate hurdle of 30,900 zone it would lead the Bank Nifty higher towards the 31,200-31,250 zone in the near term. Positive crossover on the RSI further accentuates our bullish stance on the index
Here is a list of three stocks which can give 5-9 percent return in the next 1 month:
Godrej Properties: Buy | Target: Rs 1072 | Stop Loss: Rs 942 | Upside 9 percent
The stock has been consolidating for the past three weeks and has finally broken out from the classic ‘Cup and Handle’ pattern on the daily chart. The breakout has been accompanied with a smart uptick in traded as well as delivery based volumes.
In addition, a breakout on the RSI parameter further accentuates our bullish stance on the stock. Hold long position with a mentioned stop loss on a weekly closing basis
Larsen & Toubro: Buy | Target: Rs 1635 | Stop Loss: Rs 1518 | Upside 5 percent
After being under pressure for the past three weeks the stock has finally broken out from the falling channel pattern on the daily chart.
Weekly chart analysis indicates a flag pattern breakout as well. Volumes has surpassed its past two-week average volumes which indicates that the current move is likely to extend further.
Investors can hold on to a long position with the mentioned stop loss on a weekly closing basis
Escorts: Buy | Target: Rs 595 | Stop Loss: Rs 529 | Upside 8 percent
The stock has been under pressure for the past four weeks and has finally shown early signs of recovery.
It formed a bullish engulfing pattern on the daily chart. In addition, positive divergence on the RSI indicates that the current price move is likely to turn into a reversal.
Investors can hold on to their long positions with the mentioned stop loss on a weekly closing basis.
(The author is a Senior Technical Analyst, IIFL)
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