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Last Updated : Oct 25, 2020 12:50 PM IST | Source: Moneycontrol.com

Nifty may form new all-time high next week; 3 stock to bet on for 6-17% return in short-term

Nifty is trading above all important moving averages 20/50/200 DMA indicating price action is in favour of bulls.

Shabbir Kayyumi
 
 
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Markets consolidated in a tight range of 200 points this week but managed to give higher closing above 11,900 mark. Nifty has formed flat bottom green Heikin-Ashi candlestick pattern on daily and the weekly time frame which is denoting strong bullish movement in progress.

Majority of the oscillators and indicators have cooled off in the previous week as index gave sideways movement. Nifty is trading above all important moving averages 20/50/200 DMA indicating price action is in favour of bulls.

Recently, the index is continuously taking resistance from 12,025 mark, and any decisive move above these levels will lead to a fresh breakout. Moreover, the current correction is in the form of an Inverse Head and Shoulders pattern, and targets as per formation come to 12,300. Though small resistance will come around 12,150 as that being a Fibonacci extension of 1.618 taken from 11,618 pivot point and 10,790 low.

Close

Looking at the current scenario, Nifty is set to trade above the previous lifetime high. On the downside, crucial support is provided by 20-DMA is placed around 11,680.

Bank Nifty

Bank Nifty continued its stellar rally in the last week and managed to give the highest weekly closing since March 2020. Recently, the banking index has given flag pattern breakout by closing above 24,050 and a target as per pattern comes to 26,500 which can be achieved with ease in coming days.

Here is a list of three stocks which could return 6-17 percent in short term:

DLF: Buy Around Rs 170 | Target: Rs 200 | Stop Loss: Rs 153 | Upside: 17 percent

On the daily chart, stock price has decisively broken out from its neckline of the Inverted Head & Shoulder pattern and is sustaining above the same. On the daily and weekly chart, the stocks has witnessed a shift of trend to the upward forming base with congestion. The weekly strength indicator and the momentum indicator Stochastic both are in positive territory which supports upside momentum in the near-term. Stock prices are sustaining well above all its significant moving averages which supports bullish sentiment ahead. One can buy DLF around Rs 170 with a stop loss of Rs 153 for the target of Rs 200 & Rs 220.

Bharti Airtel: Buy Around Rs 430 | Target: Rs 465 | Stop Loss: Rs 410 | Upside: 8 percent

This counter appears to be consolidating in a larger band of Rs 430–405 for the last few weeks. Hence, dips are getting bought into, hinting at some sort of accumulation at lower levels. We believe once this counter manages a sustainable close above Rs 430, it can witness a swift move towards its logical targets placed around Rs 460. Therefore, we advise positional traders to buy into this counter around Rs 430 levels. The stop loss suggested for the trade is close below Rs 410.

Reliance Industries: Buy Around Rs 2,115 | Target: Rs 2,250 | Stop Loss: Rs 2,040 | Upside: 6 percent

After a prolonged downtrend, the stock is showing a sign of life. The short-term moving averages ribbon on the weekly time frame providing strong support of positive curve and prices are also trading above all medium-term moving averages. The daily RSI is bouncing back from the important support level and other momentum indicators suggesting a short term pullback on upside in the stock in the coming days. Traders can initiate buying around Rs 2,115 level for the target of Rs 2,250 and Rs 2,350 with stop loss of Rs 2,040 mark.

(Shabbir Kayyumi, Head of Technical Research at Narnolia Financial Advisors Ltd.)

Disclaimer: 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.

"Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol."
First Published on Oct 25, 2020 12:50 pm
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