Nifty likely to reclaim lifetime high, these 3 stocks could give 10-15% return

Amid the uncertainty of global events and rising coronavirus cases in the US and Europe, bulls have painted the street green, and pre-Diwali fireworks have been witnessed in the Indian markets. The massive gains of more than 600 points on a week on week basis have placed the Nifty above the 12,250 mark.

The overall structure is favouring the bulls and the retest of the lifetime high in Nifty (12,430.50) can not be ruled out in the coming days. The 'rising window' formed on November 5, is likely to act as support and would provide a cushion to the prices in the 12,012 to 11,970 range. The prices are trading above major short term and medium term moving averages in a weekly as well as daily time frame. The weekly RSI is bouncing back from the important support levels suggesting the bulls are likely to continue having a firm grip over the market in the short term.

As per the Fibonacci theory, the prices have traded the monthly 38.2 percent projection level of 11,972 (based on the previous month trading range) at the starting of a month and hence it is quite difficult to trade the 100 percent projection level (12,400) without retracement. The 100 percent projection level and lifetime high suggest that profit booking can be expected in the 12,400 to 12,431 range. Traders can adopt buy on dips approach for the forthcoming week until the level of 11,970 holds.

The Nifty is approximately 1.4 percent short of a lifetime high while the Bank nifty needs the appreciation of 21 percent approximately to reclaim the all-time high. The divergence suggests that banking and financial sectors could outperform in the coming days to bridge the gap.

We have identified three trading ideas that are likely to outperform the market and fetch 10-15 percent return in the short term.

MCX: BUY | CMP: Rs 1,728.25 | Target: Rs 1,987 | Stop Loss: Rs 1,630 | Return: 15 percent

The stock had given the multi-year break out of a cup pattern and went sideways for a few weeks keeping the bullish bias intact. Recently, the sign of life can be seen again as the prices are bouncing back from the support zone. The bullish candlestick pattern has been formed on November 5, 2020, suggesting that bulls have entered at lower levels and are likely to take the rally forward. The RSI has bounced back from the significant support levels and short term moving averages has developed a positive curve after a mild correction. Reversal after retracement can be expected in the counter and traders can consider buying the stock at the current market price (CMP) and on any dip till 1,700 for the short-term gain.

L&T Finance Holdings: Buy | CMP: Rs 67.65 | Target: Rs 75 | Stop Loss: Rs 63 | Return: 10 percent

After a prolonged weakness, the stock has formed a medium term base. The prices have started trading above 20-week moving average and RSI has made a range shift from bearish to sideways zone.

In a daily time frame, there is a formation of an 'Inverse Head and Shoulder' pattern suggesting that the worst is over for the time being. The bullish crossover of short term and medium term moving averages ribbon is likely to infuse bullish sentiments in the counter. The RSI has started trading in a bullish zone after an approximate consolidation of two months and prices are tagging the upper Bollinger band. The whole setup looks quite prudent for bulls and traders can initiate buy positions at CMP for the short-term gain.

RBL Bank: Buy | CMP: Rs 193.25 | Target: Rs 216 | Stop Loss: Rs 179 | Return: 12 percent

The short-term range breakout has been witnessed in the stock which is supported by momentum and volatility indicators. The base formation can be seen near the 20 period simple moving average in the weekly time frame.

In the daily time frame, bullish crossovers of moving averages can be seen with decent volumes. Momentum indicators have started trading in a bullish zone and prices are tagging the upper Bollinger band. As per the Fibonacci theory the “good above series” has started and bulls are likely to take the rally forward. Traders can initiate buying positions at CMP and on any dip till Rs 189 with the short term perspective.

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