The market had a historic week as the BSE Sensex and the Nifty50 closed above the key psychological 56,000 and 16,700 levels for the first time on August 27, breaking out from the consolidation seen in the past several sessions, led by positive global cues.
Both the indices rallied 1.5 percent each, while the broader markets also got its mojo back on the back of buying interest in several key stocks. The BSE Midcap and Smallcap indices registered 2.5 percent and 2 percent, respectively.
In fact, it was a good start to the September series on Friday, indicating the continuity in the run-up amidst the volatility, in the coming weeks. Experts feel if the banking index gains strength after the current consolidation, the Nifty50 could easily surpass the 17,000-mark in the September series itself.
‘The index continues to be in an uptrend and one should continue to trade with a positive bias and avoid taking any contra trades until any reversal is seen," said Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking.
“The only concern we have been highlighting is the banking index, which has shown a relative underperformance for so long. But this index is still in a consolidation phase and has not breached its important supports. Hence, there's a good probability of some buying interest emerging in this sector, which would then lead to further support to the benchmark," he said.
He feels the immediate supports for Nifty are placed around 16,600 and 16,500 while the levels to watch on the upside will be 16,800, and then the 17,000-mark.
"Also, how the global markets shape up in the near term due to events can have an impact on our markets," he said. He advised that one should keep track of the global developments and also book timely profits in trading positions.
Here is a list of 10 trading ideas for the next 3-4 weeks. Returns are based on the August 27 closing prices:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Mahindra Logistics: Buy | CMP: Rs 766.10 | Stop-Loss: Rs 719 | Target: Rs 849 | Return: 10.8 percent
After a minor downward correction in early-, mid-August, the stock price has witnessed a sustainable upside bounce in the last couple of weeks, as per the weekly timeframe chart. The stock is now placed to show an upside breakout of the immediate resistance of the previous swing highs at Rs 800. Hence, a sustainable move above this area could have a positive impact ahead. The volume pattern and the weekly RSI show positive indication.
Buying can be initiated in Mahindra Logistics at the CMP (Rs 770.50), add more on the dips to Rs 740, and wait for the upside target of Rs 849 in the next 3-4 weeks. Place a stop-loss of Rs 719, he recommends.
Alkyl Amines Chemicals: Buy | CMP: Rs 4,236.10 | Stop-Loss: Rs 3,960 | Target: Rs 4,675 | Return: 10.4 percent
The downward correction of the last three weeks seems to have completed as per the weekly timeframe chart. The stock price has witnessed an upside bounce in the last week and has formed a bottom reversal pattern at the Rs 3,900 levels. The weekly 10-period EMA continues to offer support, and the stock has shown an upside bounce recently. The weekly ADX/DMI indicate further strengthening of upside momentum.
One may look to buy Alkyl Amines at the CMP (Rs 4,248), add more on dips down to Rs 4,080, and wait for the upside target of Rs 4,675 in the next 3-4 weeks. Place a stop-loss of Rs 3,960, he suggests.
Rohan Patil, Technical Analyst, Bonanza Portfolio
HDFC Bank: Buy | CMP: Rs 1,548.45 | Target: Rs 1,635 | Stop- Loss: Rs 1,500 | Return: 5.62 percent
The stock has been trading in a symmetrical triangle formation for the past four months and has formed a trend line resistance at the Rs 1,530 levels.
HDFC Bank has broken out of a symmetrical triangle pattern at the Rs 1,558 levels on August 24, and the price has registered a decisive breakout that suggests a change in the trend from sideways to upside.
The stock is trading above its 21, 50 & 100-day exponential moving averages on a daily time frame, which is positive for the near term.
The MACD indicator is reading above its centerline, with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above the 60 levels, which indicates positive momentum to continue.
ABB India: Buy | CMP: Rs 1,850 | Target: Rs 2,050 | Stop-Loss: Rs 1,790 | Return: 11 percent
A swing trade setup is visible for ABB India. The stock can give up to 11 percent returns. It has given a multi-year breakout and the momentum is likely to continue.
The price setup looks promising with a big green candle, coupled with impressive volumes. The MACD has shown a positive crossover on the daily charts and ADX is showing a reading of 22 with a rising trend.
The counter has to complete its accumulation phase near its horizontal trend line support on the weekly scale. RSI (14) on the daily chart is reading near the 67 levels, indicating that the stock still has a lot of potential to move ahead.
Britannia Industries: Buy | CMP: Rs 3,941 | Target: Rs 4,220 | Stop-Loss: Rs 3,783 | Return: 7 percent
Britannia Industries registered a low of Rs 2,100 on March 20 and its price witnessed a sharp reversal and gave a return of 90 percent in just four months and made a high of Rs 4,010 on July 24, 2020. Post that, the counter consolidated in a falling channel pattern on the weekly scale.
Last week's prices have given a breakout of a one-year-long consolidation pattern and tested its 52-week high of Rs 3,967.50. The Nifty FMCG index itself has given a breakout of eight weeks’ conjunction zone, indicating that the FMCG index is likely to lead from the front.
On the daily chart, the stock has formed a W pattern after forming a double bottom pattern around the Rs 3,400 level, below its 200-day exponential moving average.
Rajesh Palviya, VP, Technical and Derivative Research, Axis Securities
Timken India: Buy | CMP: Rs 1,665.90 | Stop-Loss: Rs 1,590 | Target: Rs 1,760-1,840 | Return: 5.6-10.5 percent
The stock is in a strong uptrend across all time frames. With the current close, the stock has decisively broken out of its consolidation range (Rs 1,650-1,450) on a closing basis, indicating resumption of the earlier uptrend.
This breakout is accompanied with huge volumes, indicating increased participation. On the daily chart, the Bollinger Band has also confirmed buy signals which reconfirms rising momentum. The daily and weekly strength indicator is in a bullish mode, indicating strength.
Navin Fluorine International: Buy | CMP: Rs 3,830 | Stop-Loss: Rs 3,750 | Target: Rs 4,000-4,100 | Return: 4.4-7 percent
On the daily chart, the stock has observed a ‘downsloping trendline’ breakout at the Rs 3,765 levels with rising volumes. The stock has recaptured its 20- and 50-day SMA, indicating a strong comeback of bulls. On the daily chart, the Bollinger Band has also confirmed buy signals which reconfirms rising momentum.
The daily and weekly strength indicator is in a bullish mode, indicating strength.
Jay Thakkar, Vice President and Head of Equity Research, Marwadi Shares and Finance
Dr Reddy's Laboratories: Buy | CMP: Rs 4,600.55 | Stop-Loss: Rs 4,440 | Target: Rs 4,800-4,890 | Return: 4.3-6.3 percent
This stock has fallen in a five-wave declining structure and it has formed a Hammer candlestick pattern, which is a bullish reversal pattern. The stock is expected to retrace 38.2 percent of its entire fall, which is expected to bounce back until the Rs 4,800-4,890 levels.
The support on the lower side is the recent swing low. Hence the risk- reward is absolutely in favour of the bulls. On the daily chart, momentum indicator MACD is also well into the buy mode, with a positive divergence. It is quite positive for the bulls, going forward.
Tata Motors: Buy | CMP: Rs 285.70 | Stop-Loss: Rs 273 | Target: Rs 305 | Return: 6.8 percent
Tata Motors has formed a Hammer candlestick pattern on the daily charts, which is a bullish reversal pattern. It has bounced back from the recent lows after having formed a Hammer pattern on the daily chart, which is quite positive, going ahead, as with this, the support has become quite strong.
It has also reversed quite well from the lower end of the rectangular pattern, which seems to be forming the March 2021 highs. The stock seems to have completed its wave 4 on the weekly charts and it is likely to start its wave 5 up on the positional perspective.
Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking
Cipla: Buy | CMP: Rs 923.90 | Stop-Loss: Rs 902 | Target: Rs 960 | Return: 3.9 percent
Some stocks from the pharmaceutical space have undergone a corrective phase in the last couple of months. This stock, too, has corrected from its recent highs. However, the medium chart indicates that the trend still continues to be up, and, hence, this just seems to be a corrective phase within an uptrend.
The price structure has turned positive and the RSI oscillator has given a positive crossover and it is indicating a positive momentum. Hence, we expect the stock to rebound higher in the near term. We recommend buying the stock at the current market price for a short-term target of Rs 960. The stop-loss can be placed at Rs 902.
Disclaimer: The views and investment tips by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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