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Last Updated : Jun 08, 2017 08:21 AM IST | Source: Moneycontrol.com

Nifty likely to move in a range of 9750-9450; 4 stocks which can give up to 14% return

The immediate support base for the index is placed at 9,450 region as it is the confluence of lower band of rising channel and 61.8 percent retracement of the last rising segment.

 
 
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By Dharmesh Shah,

ICICI Direct.com Research

The Nifty is witnessing hesitation amid profit booking after approaching close to the upper band of the narrow rising channel which encompasses the entire up move since February 2017, placed around 9,750 regions.

The sentiment has also turned cautious amid rising geopolitical tensions in the middle-east and ahead of UK elections and ECB meeting scheduled for the current week.

Close

We expect the index to enter into consolidation phase and oscillate between the range of 9,750 and 9,450 levels while the market will turn stock specific from here on.

The contraction of trading range over the last few sessions is an initial sign of a slowdown in the momentum. The overbought conditions on weekly stochastic oscillator after the four-week rally also warrants a temporary round of consolidation.

With the early onset of southwest monsoon and implementation of GST from July, the focus will be on key beneficiary sector/stocks. We expect consumption driven stocks from FMCG, agri, auto and capital goods segment to do well going forward.

The immediate support base for the index is placed at 9,450 region as it is the confluence of lower band of rising channel and 61.8 percent retracement of the last rising segment.

Here is a list of top 4 stocks based on technical parameters which could give up to 14 percent return in the next 6 months:

ZEE Entertainment: BUY| Target Rs595| Stop Loss Rs482| Upside 14%| Time Frame 6 months

The stock remains in a well-established uptrend and has generated stable returns for long-term investors. The entire up move since May 2015 has occurred in a well-defined rising channel highlighting a structured up move and persistent demand at elevated levels.

After hitting its lifetime high (Rs590) in October 2016 the stock witnessed a gradual corrective decline and tested the lower band of the channel in November 2016.

The steady pullback during January-February 2017 indicating the presence of strong support at the lower band of the rising channel. Presently, over the last three months, the stock is seen consolidating in the range of Rs500- 550 which indicates a higher base formation above the long-term rising 52-week moving average.

We believe the stock is attractively placed and offers a favourable risk-reward setup from medium term perspective to ride the next up move

Dabur India: BUY| Target Rs320| Stop Loss Rs265| Upside 14%| Time Frame 3 months

The NSE FMCG index remains on a strong footing after registering a resolute breakout above the long-term bullish Cup & Handle pattern. We expect the FMCG space to relatively outperform the benchmark going forward.

The share price of Dabur India is attractively poised at its key value area and presents a good buying opportunity with a favourable risk/reward for medium-term perspective

The price wise correction from June 2016 all-time high of Rs320 got arrested precisely near the major value area for the stock placed around Rs260 region, as it is the confluence of a long term rising trend line drawn off October 2014 bottom and 61.8% Fibonacci retracement of 2016 up move placed around Rs265 region.

We believe the corrective phase in the stock has approached maturity and it is attractively poised above its major value area.

We expect the stock to challenge its key overhead trendline joining the highs of August 2015 and July 2016 placed around Rs320 over the coming months

Bharat Bijlee: BUY| Target Rs1320| Stop Loss Rs1035| Upside 12%| Time Frame 3 months

The entire corrective price action over the last one year represents a well-defined rounding pattern on the weekly charts. A rounding pattern formed within an uptrend develops as a bullish continuation pattern which marks a secondary corrective phase after a strong up move.

The base of rounding pattern is poised at the key value area of Rs740 being the long term rising 52-week exponential moving average and 61.8 percent retracement of the preceding rising segment.

The stock witnessed a base formation for over eight months at the key value area during August 2016 to March 2017, highlighting accumulation by stronger hands ahead of the impending reversal.

The resolute breakout above the neckline of bullish rounding pattern and 2016 yearly high of Rs1109 has triggered a structural turnaround implying the end of one-year corrective phase and resumption of the primary uptrend.

We expect the stock to head towards Rs1320 levels over the coming months being the 123.6% Fibonacci extension target of the last rising segment

Bajaj Electricals: BUY| Target Rs395| Stop Loss Rs338| Upside 11%| Time Frame 3 months

The share price of Bajaj Electricals has recently registered a resolute breakout above the Bullish Flag pattern, thus offering a fresh entry opportunity.

The sharp up move during January-April 2017 from Rs216 to Rs387, was followed by sideways consolidation for six weeks.

This sideways consolidation took the pictorial shape of a bullish Flag pattern which is a bullish continuation pattern marking a temporary pause after strong rally as bulls takes a breather before the continuation of the primary uptrend.

The strong up move in the in the last two weeks trade has seen the stock register a breakout from the bullish Flag continuation pattern.

Time wise, during the previous rally from January–April 2017, the stock has registered a faster retracement of the previous decline of five months from Rs282 to Rs202 in just three months. Faster retracement of the last falling segment highlights the underlying strength of the trend

Disclaimer: The author is Head Technical, AVP at ICICI Direct.com Research. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Jun 8, 2017 08:21 am
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