Nifty likely to see profit booking after rally; these 3 stocks could return 6-8%

Hadrien Mendonca

IIFL

It has been a fantastic week for the Indian market as the crucial 200-DEMA was not only breached but was also held on to. However, the Nifty has now retraced 50 percent of the entire 1700-point correction from its all-time high of 11,760 to 10,004.

This indicates that some profit booking cannot be ruled out in the near term. The Nifty has also filled the gap of 10,843, which was created on October 4

The market is expected to cool off a bit in the near-term. It is advisable to stick to large-caps and quality mid-cap names.

Bank Nifty, on the other hand, also witnessed a strong up move throughout the week. However, it has now reached the rising trendline zone of 27,100, which is proving to be an important resistance for it.

On the downside, 26,550 is the important support zone for the index.

Here is a list of stocks that could return up to 6-8% in the next one month:

United Spirits: Buy| Target: Rs 725| Stop Loss: Rs 646| Return: 8%

The stock has been consolidating for the past three weeks and has finally broken out from a classic Flag pattern on the weekly chart. The price outburst has been accompanied by a smart uptick in traded volumes.

Apart from this on the monthly chart, United Spirits has formed a strong bullish candlestick pattern. If the current momentum extends then we expect the stock to move higher towards its potential target of Rs725 in near term.

Kotak Mahindra Bank: Buy| Target: Rs 1,295| Stop Loss: Rs 1,190| Return: 6%

After trading in a narrow trading band for over five weeks, the stock has finally broken out from the consolidation phase on the daily chart.

The stock has also surpassed its long-term 200-DEMA and closed above the same Apart from this on the weekly chart Kotak Bank has broken out from a falling trendline which further accentuates our bullish stance on the stock

Cipla: Buy| Target: Rs 570| Stop Loss: Rs 514.5| Returns: 7%

The stock has been in a declining mode for the past three months and has reached its intermediate rising trend line support zone at the current juncture.

The stock has also broken out from a falling channel pattern on the daily chart with impressive volumes. The relative strength index has also recovered above the oversold zone and has also given a positive crossover indicating that current momentum is likely to get extended.

Disclaimer: The author is a Senior Technical Analyst, IIFL. 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.