Ashish Chaturmohta Sanctum Wealth Management
The markets had a volatile session of trade on Monday, especially in the opening trade when the Nifty was down by 258 points as early vote counting suggested a close fight between BJP and the Congress in the Gujarat state elections.
But, it recovered 369 points from day's low to hit a high of 10,444 during the day as ruling party seemed certain of a clear majority. However, the Nifty closed off its high at 10,389 levels, up by half a percent for the day.
The Nifty has formed a long bullish candlestick pattern for the day that has also crossed and closed above the falling resistance trend line originating from a high of 10,490 levels in the previous trading session.
Thus, indicating the index has moved out from a downsloping corrective trading channel from November high on the daily chart. Now, sustaining at current levels, the index is likely to test its recent all time of 10,490 levels.
Crossing and sustaining above 10,490 levels, the index can be expected to rally towards 10,700 levels. On the downside, immediate support is seen at 10,260-10,215 levels, while major support for the market remains at 10,000 odd levels.
As major events in the month of December are now out of the way; India VIX has seen cooling off in the last few trading sessions to 13.12 levels. A further drop in volatility will be supportive for the market to move higher.
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DCB Bank: BUY| CMP Rs195| Stop loss Rs188| Target Rs220| Return 12.8%
The stock had seen a strong rally from its December 2016 low of 103 to a high of 213 in June 2017. Since then, its price has undergone a correction and retraced 38.2% of the Fibonacci level of the upswing (103-213) which comes around 171 levels.
The lower top formation and bounce back from support zone 175-170 levels has led to descending triangle pattern formation. Now, the stock has given breakout from this pattern and crossed the resistance level of 193.
Positive crossover with 200 DMA is seen and in the last three days stock has seen high volume action suggesting buying participation in the stock.
Also, the price has given Bollinger band breakout on the upside with the expansion of bands suggesting the stock is likely to continue rallying higher. Thus, the stock is a buy at current levels and on dips to 193 with a stop loss of 188 for target 220 levels.
NRB Bearings Ltd: BUY| CMP Rs158| Stop loss Rs150| Target Rs190| Return 20%
The stock has been range bound largely between 160 and 100 levels for more than a year now. The rally in the last couple of months has been on high volumes suggesting buying participation on the stock.
Price has now reached the upper end of the range and is trading at breakout levels. MACD has given positive crossover to its average on daily and weekly chart suggesting the start of a fresh trend on the upside.
Hence, considering the consolidation and price volume action in last couple months, the stock is likely to see a breakout on the upside. The stock can be bought at current levels and on dips to 155 with a stop loss of 150 for target 1905 levels.
Bharat Electronics Ltd: BUY| CMP Rs182| Stop loss Rs174| Target Rs210| Return 15%
The stock is in strong long-term uptrend forming a higher top higher bottom pattern on daily chart. For last seven weeks, the stock has been trading in the range of 193 and 174 levels consolidating its gains.
On the daily chart, the price has formed bullish candlestick with long lower shadow suggesting buying participation coming in at lower end of the range.
Momentum indicators have given positive crossover with their respective averages on daily chart suggesting a reversal in short-term trend. Thus, the stock is a buy at current levels and on dips to Rs182 with a stop loss of Rs174 for target Rs210 levels.
Bajaj Finserv: BUY| CMP Rs5210| Stop loss Rs5000| Target Rs5800| Return 11%
The recent correction in the stock from high of 5789 since September has been finding support around 49000 levels on multiple occasion. The stock has also retraced 50% of the rally from low of 4094 to high of 5789 and is seeing a bounce back.
Price has given positive crossover above 50 days moving average which has been acting as resistance for the stock. MACD has also given positive with average and moved above the neutral level of zero suggesting a change in trend to the upside. Thus, the stock is a buy at current levels and on dips to 5145 with a stop loss of 5000 for target 5800 levels.
Jubilant FoodWorks: BUY| CMP Rs1746| Stop loss Rs1645| Target Rs2000| Return 14%
The stock is in strong uptrend forming a higher top higher bottom on the daily chart. The stock has taken support at 50-days moving average and seen a bounce back from to move above short-term 20 DMA.
It has formed bullish hammer candlestick pattern with long lower shadow at moving average. Volumes have been above average indicating buying participation in the stock.
Relative strength index has given positive crossover with its average on daily chart suggesting resumption of the uptrend. Thus, the stock is bought at current levels and on dips to 1720 with a stop loss of 1645 for target 2000 levels.
Disclaimer: The author is Head of Technicals and Derivatives, Sanctum Wealth Management. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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