Ashish Chaturmohta Sanctum Wealth Management
The Nifty saw profit booking on Wednesday and closed around its crucial support level of 10,700 levels. Thus, for the day, the index formed a Bearish Belt Hold like candlestick pattern for the day.
The index also touched the rising resistance trend line originating from the September high of 8,975 levels on the weekly chart. Thus, the market may see some sideways to negative action in the short term if it breaks below immediate support of 10,713-10,690 zone.
Below this, the next support for the index is seen at 10,590-10,550 levels. While on the upside, crossing above yesterday’s high of 10,783 on a sustainable basis will see continuation uptrend towards 10,840 and then possibly 11,000 levels.
The Nifty options open interest Put/Call ratio (PCR) is at 6-year high of 1.78 level which indicates heavy put writing and suggesting market participants do not expect Nifty to decline by much.
But, high PCR level is the extreme case now indicates complacency in the market and may lead to negative news flow.
INDIA VIX has also seen a steady climb to touch 14.30 with the Union Budget approaching. A further rise in volatility could be a cause of concern for bulls. Thus, traders need to be cautious in the market and need to follow strict stop loss.
Here is a list of top five stocks which could give up to 30% return in the short term:
Just Dial: BUY| Stop loss Rs575| Target Rs690| Return 8%
The stock touched high of Rs1894 in August 2014 and then declined down to low of Rs318 levels in December 2016. From the low, price rallied to touch high of 620 only to test the previous low of 318 and now back to 606 levels.
In the process stock has formed long-term bullish double bottom reversal pattern on weekly chart. Volume during the pattern formation on its rising leg was high indicating buying accumulation in the stock at lower levels.
The weekly ADX line, an indicator of trend strength has steadily moved above neutral level of 20 to 30 suggesting up trend is likely to continue.
Currently, the stock is trading around the double bottom neckline which comes at 620 levels and considering the technical chart setup it is likely to see a breakout on the upside.
Thus, the stock is buy at current levels and on dips to 595 with a stop loss below 575 for target 690 levels.
Kotak Mahindra Bank: BUY| Stop loss Rs1010| Target Rs1100| Return 6%
After touching high of 1115 in October last year, it corrected down 982 levels In November. Since then the stock has been trading sideways and consolidating at lower levels. Price has formed triangle pattern over last two-month period.
On Monday, the stock gave breakout from this pattern with strong price momentum and good volumes indicating breakout is likely to sustain. Price has given breakout from Bollinger bands with the expansion of bands on upside indicating a trend to continue in the direction of the breakout.
Daily MACD has moved above the neutral level of zero suggesting starting of a fresh trend for the stock. Thus, the stock is buy at current levels and on dips to 1025 with a stop loss below 1010 for target 1100 levels.
Tata Elxsi: BUY| Stop loss Rs1005| Target Rs1160| Return 11%
The stock is in steady uptrend forming higher top formations on the daily chart as it moves along 20-day moving average. The stock has also crossed the rising resistance trend line originating from January 2017 high of 777 level, suggesting stock may see an acceleration in an uptrend.
Price has crossed its pivotal swing of 1032 indicating supply levels and can now rally towards its previous highs of 1160-1200 levels. Thus, the stock is a buy at current levels and on dips to 1030 with a stop loss below 1005 for target 1160 levels.
Jain Irrigation: BUY| Stop loss Rs135| Target Rs180| Return 30%
The stock had been in decline since August 2010 high of 264 till August 2013 low of 46 levels. From the low price rallied to high of 133 and then again declined back to 46 levels.
Over the last one stock has rallied to 143 and crossed its previous pivotal high of 133. On monthly chart stock has formed a long term bullish double bottom reversal pattern and given the breakout.
The stock has witnessed high volumes during pattern formation indication accumulation in the stock at lower levels. The monthly ADX line, an indicator of trend strength has moved above neutral level of 20 suggesting uptrend is likely to continue.
Generally, after multiyear base pattern breakout, stock tend to see a strong rally on the upside. Thus, the stock is a buy at current levels and on dips to 140 with a stop loss of 135 for target 180 levels.
ACC: BUY| Stop loss Rs1785| Target Rs1950| Return 5%
Looking at the long term monthly chart, the stock has formed W shaped pattern over last three years broadly between 1850 and 1200 levels. Over the last six months stock has been trading around the breakout levels and seen consolidation.
After last week’s narrow consolidation price showing signs of a breakout from short this short-term flag on the upside. Weekly MACD line has given positive crossover with its average above the neutral levels zero, suggesting the medium-term sideways trend has turned up.
Thus, considering the price structure on different time frames, the stock is a buy at current levels and on dips to 1810 with a stop loss of 1785 for target 1950 levels.
Disclaimer: The author is Head of Technicals and Derivatives, Sanctum Wealth Management. 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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