We expect the Nifty index to retest its recent all-time high of 10,138. Any sustainable move above this level will allow the index to rally further towards 10,250.
Last week amid consolidation, Nifty entered inside the Symmetrical Triangle pattern which eventually diminished the bullish sentiment.
Subsequently, the trading range shrunk further and Nifty oscillated in a range of 9,980-9,850. On the daily basis as well as on an hourly chart, the Bollinger Band squeezed significantly last week indicating towards the increase of volatility in coming trading session.
On Monday, Nifty opened with a gap and eventually surpassed the strong resistance zone of 9,988-10,015. Also, the hourly Bollinger Band index has started expanding along with the price which hugged the upper band of the indicator.
Hence, we expect the Nifty index to retest its recent all-time high of 10,138. Any sustainable move above this level will allow the index to rally further towards 10,250.
On the flip side, 9975-9940 zone will act as an immediate support any decisive closing below this level will pull Nifty lower towards 9850.
Option data also indicate that bullish momentum will continue in the short-term. In 9900-10000 call option short covering was seen in Monday’s trade whereas at the same time fresh Put writing was seen at 10,000 option.
From current levels, we expect Nifty to trade northwards and can retest its previous high and even make new highs in coming session.
Here is a list of top 4 stocks which can give up to 14% return in short term:
GAIL India: BUY| Target Rs450| Stop Loss Rs370| Time Frame 10 to 12 trading sessions| Return 14%
After consolidating in a broad range of Rs350-390 for the last several weeks, Gail finally gave a breakout from this range in Monday’s session and closed above that.
The breakout was also supported by rising volume activity and a huge buildup of long positions in futures segment.
The daily RSI (14) managed to enter the 60 levels. Hence, we advocate traders to buy this stock in a range of Rs395 to Rs390 with a price target of 450. A strict stop loss should be placed at Rs370.
Nestle India: BUY| Target Rs8350| Stop Loss Rs6700| Time Frame 15 to 21 trading session| Return 14.4%
Looking at the weekly chart, the stock formed an ‘Ascending Triangle’ pattern and it manages to confirm its breakout by posting a record weekly close above its previous peak of around 7142 (weekly close of March 13, 2015).
The weekly, as well as the monthly RSI (14), entered above 60 marks which support our bullish hypothesis. The volume activities since last two weeks have also pickup along with the good delivery mark.
Thus, we advocate positional traders to accumulate this stock at around 7260 with a price target of Rs8350 and a stop loss of Rs6700.
Exide Industries: BUY| Target Rs247| Stop Loss Rs205| Time Frame 15 to 20 trading session| Return 12%
Looking at the weekly chart, stock rebound sharply after testing its previous resistance zone of 200 (October 21, 2016). Subsequently, we saw decent recovery during last week as a result stock confirmed its breakout from the downward sloping trend line.
On the weekly chart, the RSI (14) rebound after testing 40 levels. Considering the overall chart structure, we expect this stock to rally in the near term.
Hence, we recommend traders to buy this stock around Rs220 with a price target of Rs247. A stop loss should be placed near Rs205.
Castrol India: SELL| Target Rs355| Stop Loss Rs408| Time Frame is 12 to 15 trading sessions| Return 9%
Looking at the daily chart, the stock has been under pressure and formed Lower Top Lower Bottom formation. During the recent fall, stock registered a low of around Rs368 and rebound towards Rs395-398 zone.
If we look at the daily chart, a Rs395-398 zone which was previously acting as a near term support, however, post the breakout it has reversed its role and acting as a strong resistance and price failed to close above this zone during last week.
This zone coincided with the 61.8% retracement of its previous corrective move along with the daily 89-EMA. The daily RSI (14) came near its resistance of 60 levels.
Considering the above technical pattern, we expect this stock to resume its down trend hence we recommend traders to build a short position at the current market price of Rs392 with a price target of Rs355. A stop loss should be placed at Rs408.Disclaimer: The author is Head Technical Research, Way2Wealth Brokers Pvt. Ltd. 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.