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Last Updated : Jun 08, 2018 10:31 AM IST | Source: Moneycontrol.com

Nifty may face resistance around 10,930; 3 stocks that could return 7-11%

A break above the mentioned resistance zone will soon lead the Nifty towards its all-time high. Weight of the evidence still indicates that its bullish stance continues to remain intact.

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Hadrien Mendonca

The Nifty surged ahead in the past two trading sessions, reversing weakness that was seen earlier in the week. The sentiment got a fillip after the Monetary Policy Committee (MPC) retained its neutral policy stance, raising hopes that there would be no more rate hikes in the near future.

The index formed a robust bullish candlestick pattern on the daily chart for the second consecutive day. This move has provoked it to breakout from a larger Symmetrical Triangle pattern on the daily chart. At present, there are no signs of a reversal on the charts. However, there are two important resistance points that the Nifty has to surpass before we see a significant confirmation of the breakout:

1) A close above the 10,820-10,830 zone, and

2) A breach past the Karnataka election verdict day high of 10,930 levels.

A break above the mentioned resistance zone will soon lead the Nifty towards its all-time high. Weight of the evidence still indicates that its bullish stance continues to remain intact.

However, Bank Nifty is the real cause of concern as heavyweights from the private banking space are underperforming while its state-run peers are trying to make up for the lack of leadership, which is proving futile.

Going forward, if there is going to be any weakness in indices, it may be led by the banking space. As far as the midcap space is concerned it is a classic case of failed moves. We observed an inverse Cup and Handle pattern breakdown. However, at the current juncture, the breakdown has failed. And failed moves historically have a tendency of generating fast moves in the opposite direction.

Here is a list of stocks that could deliver up to 7-11% returns in the near future:

Sanofi India: Buy| Target: Rs 5,707| Stop Loss: Rs 4,934| Returns 10%

With the midcaps making a comeback, Sanofi has gained further strength. The stock has not only moved higher but has also broken out from a three-month consolidation phase.

Maintaining its higher top higher bottom structure, relative strength too indicates stock has a potential of making a dash towards its potential target of Rs 5,707 in the medium term.

Bajaj Finance Ltd: Buy| Target: Rs 2,342| Stop Loss: Rs 2,083| Returns 8%

The stock has been consolidating for the past two weeks and has finally broken out from a Flag pattern on the daily chart. The price outburst has been accompanied with a credible up thrust in traded volumes.

Other momentum oscillators also indicate that stock has the legs to carry forward the momentum. Protect every long position with a stop loss around Rs 2,083 levels.

Infyosys: Buy| Target: Rs 1,343| Stop Loss: Rs 1,210| Returns 7%

The stock has been showing immense strength and continues to maintain its higher top higher bottom structure. Infosys has broken out from a two-week consolidation pattern on the daily chart.

The relative strength also indicates the stock has the ability to carry forward the current momentum. The 50-DEMA has proved to act as a strong support every time the stock has declined. We expect the stock to move higher towards its potential target of Rs 1,343 in the medium term.

Disclaimer: The author is 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.
First Published on Jun 8, 2018 10:31 am
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