Aditya Agarwal
Way2Wealth Brokers
After breaching the previous all-time high of 11,171.55 on the previous Friday, Nifty hit another milestone and registered a record high of 11,390.55 during Wednesday’s session.
The 25-bps rate hike in repo rate by RBI along with the hawkish stance by the US FOMC put pressure on emerging markets and our market, too, reacted and corrected sharply on Thursday.
Looking at the monthly chart, July month candle closed well above its previous all-time high of 11,171.55 which indicates that the broader trend is undoubtedly bullish; however, such move failed to get confirmed by the RSI (14) which signaled bearish divergence.
At this juncture, last week Friday’s gap area of 11,210 – 11,185 will act as a strong support. Any sustainable move below this level will extend the ongoing profit booking towards 11,080 – 11,025 levels, respectively.
Whereas on the higher side, 11,390 – 11,415 is a strong supply zone and surpassing this zone will allow Nifty to rally towards 11,500.
Options data also indicate that 11,500 will prove to be a stiff supply zone for Nifty. Maximum call writing has been seen at 11,500 option and any move towards those levels can be used by a trader to book profit in their long positions.
Similarly, on the lower side, put writing at 11,200 will act as an immediate support and below that Nifty can drift towards 11,000 levels.
Overall, for this month, we expect broader indices to trade between 11,000 and 11,500 levels before giving any fresh breakout.
Here are the lists of stocks which could give 10-19% return in the next 15-20 sessions:
Jet Airways: Buy around Rs 325 - 320 | Target: Rs 370 | Stop loss: Rs 300 | Return: 19%
Looking at the weekly chart, the stock has been in a protracted downtrend since the past several months and lost more than sixty percent from its January 2018 high. Off late, the stock formed a strong base near 300 levels and rebound sharply.
Looking at the lower degree chart, we believe that the stock has made the short-term bottom and is likely to rally in coming trading sessions.
On a weekly chart, the stock formed a Bullish Harami pattern and yesterday it surpassed the pattern high which triggered fresh buying interest.
The momentum oscillators on the weekly chart are into deep oversold zone hence we expect a decent bounce in coming trading session.
Thus, we recommend traders to buy this stock in a range of Rs 325 to Rs 320 zones with a price target of Rs 370. Stop loss should be placed at Rs 300 on a closing basis.
IOC: Sell around Rs 169 - 171 | Target: Rs 150 | Stop loss: Rs 181.50 | Return: 10%
Looking at the weekly chart, the stock has corrected sharply from its all-time high of around Rs 221 on back of rising crude oil price and corrected till Rs 150. Subsequently, it saw a gradual pullback in last few weeks and is currently oscillating near Rs 170 levels.
Looking at the weekly chart, IOC has formed a bullish divergence pattern and now the weekly RSI (14) signals a negative reversal pattern which indicates that the recent rally was merely a pullback and stock is likely to resume its downtrend soon.
Hence, we advocate traders to go short in a range of Rs 169 to 171 with a price target of Rs 150. Stop loss should be placed at Rs 181.50 on a daily closing basis.
Vedanta: Sell around Rs 218 - 221 | Target: Rs 188 | Stop loss: Rs 240 | Time frame: 15 to 21 trading sessions | Return: 12%
Vedanta has been in a downtrend since the past several months and formed a lower top lower bottom formation. Recently, the stock hit a fresh 52-week low near Rs 200 levels and rebound sharply.
However, the bounce got resist near Rs 227 levels as this level coincided with the 61.8 percent retracement of its previous daily swing move. The lower top lower bottom formation on the daily chart is intact.
The daily RSI (14) had signaled negative reversal and impact of the said pattern was seen in past few trading sessions. Hence, we recommend traders to go short in this counter in a range of Rs 218 to Rs 221 with a price target of Rs 188. A stop loss should be placed at Rs 240.
Disclaimer: The author Head of Technical Research, Way2Wealth Brokers Pvt. Ltd. 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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