Ashish Chaturmohta Sanctum Wealth Management
For third consecutive Monday, the market witnessed a negative start to the week on trade wars tension and weakness in rupee. Government measures announced over the weekend arrested the currency decline but failed to enthuse the markets.
The Nifty closed the day at 11,378 level down by 1.2 percent. Broader market indices performed better than benchmark with BSE Midcap and Smallcap losing 0.76 percent and 0.05 percent respectively. Market breadth was negative with four advancing shares for every five declines on NSE.
The index formed bearish belt hold on candlestick chart i.e. open and high price were at same level indicating selling pressure in the market. Nifty has filled Friday’s opening gap and was trading below 11,366. The next support for the index is seen at 11,160 level.
For market to show strength sequence of lower highs and lower lows needs to be broken. Hence, 11,523 needs to be taken out first for market to see level of 11,600. In Nifty options, maximum open interest for Puts is seen at 11,400 followed by 11,000 and 11,200; while for Calls it is at 11,800 followed by 11,500 and 11,600.
Call writing was seen in 11,400, 11,500 and 11,600 and some Put unwinding was seen in same strike price suggesting upside is likely to be capped.
India VIX after cooling off in last couple of days has taken support at breakout levels and increased by 5 percent to 14.5 level; indicating Nifty is likely to remain under pressure.
Here are the top five stock trading ideas which can give good returns in the near term:
Eicher Motors: Buy | CMP: Rs 29,664 | Stop loss: Rs 28,800 | Target: Rs 32,000-32,700 | Return: 10%
The stock has strong support levels around Rs 26,500 level where multiple lows are seen over last one-year period. For the last eight weeks, the stock has witnessed consolidation above this support level in a range of Rs 29,200 and Rs 26,600.
The lows of this consolidation are higher lows, leading to formation of ascending triangle pattern. The price has given breakout on the upside and seen follow through action in yesterday’s session. The stock has given breakout from Bollinger band with the expansion of band and closed above upper band indicating start of a fresh trend in the direction of breakout on daily chart. It has crossed above 200-day moving average and moved higher.
Thus, stock can be bought at current level and on dips to Rs 29,400 with stop loss below Rs 28,800 for target of Rs 32,000-32700.
Torrent Pharmaceuticals: Buy | CMP: Rs 1,782 | Stop loss: Rs 1,700 | Target: Rs 1,950 | Return: 9%
The stock has seen major consolidation between Rs 1,700 and Rs 1,200 levels over the last two years at its all-time high levels. Last month stock witnessed breakout from this pattern with strong momentum and high volumes. Since then, the price has been holding above breakout level which is now acting support for the stock.
It is consolidating between Rs 1,700 and Rs 1,870 levels. The price is holding above 21-day exponential moving average and showing bounce back from average with bullish candlestick and above average volumes. Also, the stock has formed candlesticks with long lower shadow in last few sessions indicating buying coming in at lower levels.
Stochastic has given positive crossover with its average on daily chart. Thus, the stock can be bought at current level and on dips to Rs 1,770 with stop loss below Rs 1,700 for target of Rs 1,950 levels.
UPL: Buy | CMP: Rs 724 | Stop loss: Rs 690 | Target: Rs 810 | Return: 12%
The stock touched an all-time high of Rs 902 in August last year and since then has been declining. It hit a low of Rs 537 in July, this year. The decline has retraced 61.8 percent Fibonacci retracement of the major rally from Rs 367 to Rs 902 levels which comes at Rs 572 and seen strong bounce back. The rally from low has been on good volumes and long bullish candlestick indicating buying participation in the stock.
UPL crossed falling resistance trend line connecting highs of Rs 902 and Rs 828 on weekly chart. The 200-day moving average which was acting as resistance for the stock has been crossed after consolidating around it for the last couple of weeks.
Thus, stock can be bought at current level and on dips to Rs 715 with stop loss below Rs 690 for target of Rs 810.
United Breweries: Buy | CMP: Rs 1,322 | Stop loss: Rs 1,260 | Target: Rs 1,550 | Return: 17%
The stock has formed major bullish cup and handle bottoming out pattern on monthly chart over three-year period. In early August this year, it witnessed breakout from the pattern on strong momentum and high volumes indicating buying participation in the stock.
The stock hit an all-time high of Rs 14,62 and seen correction down to Rs 1,273 level. The decline has been on below average volumes and price is holding above breakout levels.
Stochastic has given positive crossover with its average on daily chart. Thus, the stock can be bought at current level and on dips to Rs 1,310 with stop loss below Rs 1,260 for target of Rs 1,550.
PVR: Buy | CMP: Rs 1,396 | Stop loss: Rs 1,340 | Target: Rs 1,520 | Return: 9%
The stock had witnessed sharp fall from Rs 1,400 levels to low of Rs 1,062 in the month of July this year. Since then stock has seen smart rally recovering its losses. The stock is now consolidating around breakout and sustaining at current levels indicating strength in the counter.
The price has moved above 200-moving average and is now acting as support for the stock. MACD line on weekly chart has moved above equilibrium level of zero indicating correction is over for the stock.
Thus, stock can be bought at current level and on dips to Rs 1,380 with stop loss below Rs 1,340 for target of Rs 1,520.
Disclaimer: The author is Head Technical and Derivatives at Sanctum Wealth Management. 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
