Sacchitanand Uttekar
The Nifty50 index registered a fourth consecutive Doji formation in its upmove towards the upper end of the ongoing broadening formation. The move could witness some acceleration only above 11,377 towards 11,460-11,500 zone in the coming sessions. On its daily scale, regular occurrences of Doji formations is also significant as, of late, the price action has been away from its 5-day EMA along with its RSI approaching the overbought zone again.
Technically, the index is expected to swing above the upper bound of the broadening formation placed around 11,377 and move towards the 11,500 zone.
While weakness, if any, would need validation below 11,000. As broadening formation is a consolidative pattern, it is ideal to remain cautious hereon and restrict trades to intraday and short term with more emphasis on stock-specific trade setups on either side.
Major trend weakness or distortion would only be valid once below 10,880 for any larger degree corrective move, until then expect confined action within 11,000-11,500 during the week.
Here is a list of three stocks that could return up to 24 percent in the short term:
IndusInd Bank: Buy | Target: Rs 580 | Return: 11 percent
A breakout above four-day on consolidation with its corresponding RSI moving above 50 is a sign of acceleration in momentum. Recent options data indicates confident PE writing around Rs 500 zone, which remains a strong base for the week, while upmove to remain capped under Rs 600, which also coincides with 20-week EMA zone. Trading longs could be built for a move towards Rs 580 with a stop below Rs 505.
SMS Pharma: Buy | Target: Rs 120 | Return: 24 percent
The sector has a strong performance. The stock also remains one of the outperformers from its pack. It has been regularly witnessing flag formations (continuation pattern) in its journey from its major breakout zone around Rs 50.
The upmove has been supported well with volumes while its recent continuation pattern indicates a likely move towards its life-highs placed at around Rs 120. Trading longs could be added with a stop below Rs 82 for a move towards Rs 120.
Apollo Hospitals: Sell | Target: Rs 1,660 | Return: 5.2 percent
The occurrence of a Bearish Belt Hold formation on the daily scale on August 10 also confirmed the Hanging Man formation. Since the patterns have occurred near their February 2020 highs along with a negative divergence on their strength indicators the stock may witness some temporary setbacks around this resistance zone. Hence shorts could be deployed with an anticipation of a pullback towards Rs 1,660 zone with a stop above Rs 1,765 from hereon.
(The author is DVP – Technical (Equity) at Tradebulls Securities.)
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are his own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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