Ashish Chaturmohta
The late surge helped the market close in the green on December 4. The Nifty finally settled at 12,043 up by 0.41 percent. Broader market indices BSE Midcap and Smallcap were up by 0.5 percent and 0.3 percent.
Market breadth on NSE was positive with the advance-decline ratio of 8:7. After the last three days of correction, Nifty has found support at 21-day exponential moving average and seen a bounce back. Also, the index managed to hold above the short-term rising support trend line connecting recent low of 11,802 and 11,883, thus, forming higher lows on the daily chart.
Now holding above 11.935 levels, expect uptrend to continue in the market for 12,350 and then 12,500 odd levels. Breaking below 11,935, we expect profit booking towards 11,802. The low of 11,802 is now a key pivotal support level for the market in the short term.
In Nifty December monthly expiry options, maximum open interest for Put is seen at strike price 12,000 and 11,500; while for Call maximum open interest is seen at 12,500 followed by 12,000. Strike price 12,000 has significant open interest build up and sustaining above it, we expect uptrend to continue in the market.
India VIX saw a sharp decline of 8.52 percent to close at 13.32 levels. VIX continues to see decline and helping the market sustain at higher levels.
Below are the top 5 stocks which can return 12-17% in the next 1-3 months:
Dr Lal Pathlabs: Buy | CMP: Rs 1676 | Stop loss: Rs 1590 | Target: Rs 1925 | Upside: 15%
The stock is in uptrend forming higher tops and higher bottoms on the daily chart since August this year. It recently hit a high of Rs 1665 and went into consolidation mode for the last five weeks. The stock has formed bullish continuation ascending triangle pattern with higher lows and highs around the same level on the daily chart.
The stock has witnessed higher volumes on the up move while below-average volumes on declines indicating buying participation in the stock. Price is moving along 21-day exponential moving average i.e. dips taking support at average and trending higher.
After recent consolidation stock is showing signs of breakout on the upside after hitting a new all-time high on closing basis. Relative strength index has given positive crossover with its average on the daily chart. Thus, stock can be bought at current levels and on dips to Rs 1650 with stop loss below Rs 1590 for the target of Rs 1925 levels.
Kotak Mahindra Bank: Buy | CMP: Rs 1651 | Stop loss: Rs 1635 | Target: Rs 1850 | Upside: 12%
After four months of consolidations, the stock witnessed a breakout in mid-September above Rs 1550. It went onto to hit an all-time high of Rs 1,684 and then corrected down back to retest breakout level of Rs 1550. The stock has been range-bound between Rs 1550-1640 odd levels and formed a base for next leg of the rally.
Kotak Mahindra Bank formed higher low on short term chart indicating buying coming in at higher levels. Price has taken support 50-day moving average. The stock is now showing signs of a breakout on the upside with the stock closing at a 10-week high.
MACD has given positive crossover with its average above equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips to Rs 1635 with stop loss below Rs 1590 for a target of Rs 1850 levels.
Dixon Technologies: Buy | CMP: Rs 3483 | Stop loss: Rs 3300 | Target: Rs 4000 | Upside: 15%
The stock is in uptrend forming higher tops and higher bottoms on the daily chart since August this year. After recent correction stock has seen strong up move indicating resumption of the uptrend. The price crossed and closed above key 61.8 percent (3370) Fibonacci retracement of the major fall from Rs 4494 to Rs 1560 levels.
The stock has witnessed high volumes on the up move while below-average volumes on declines indicating buying participation in the stock. Relative strength index has given positive crossover with its average on the daily chart. Thus, stock can be bought at current levels and on dips to Rs 3430 with stop loss below Rs 3300 for target of Rs 4000 levels.
Gujarat Gas: Buy | CMP: Rs 217 | Stop loss: Rs 205 | Target: Rs 255 | Upside: 17%
The stock witnessed major consolidation between Rs 195 and Rs 115 levels over a year's time and formed a base for next leg of the rally. In late October stock saw a breakout from the base to touch high of Rs 215. It then corrected down to rest the breakout level of Rs 195 and seen a bounce back to new all-time levels, thus, indicating a resumption of the uptrend.
The stock has witnessed high volumes on the up move while below-average volumes on declines indicating buying participation in the stock. Price has given a breakout on the upside from Bollinger Band with an expansion of bands indicating the start of a fresh trend in the direction of breakout on the daily and weekly chart. Thus, stock can be bought at current levels and on dips to Rs 213 with a stop loss below Rs 205 for a target of Rs 255 levels.
Divis Laboratories: Buy | CMP: Rs 1809 | Stop loss: Rs 1735 | Target: Rs 2050 | Upside: 13%
The stock has been in uptrend forming higher tops and higher bottoms on the weekly chart. After hitting highs of Rs 1775 in March this year, the stock went into consolidation mode between Rs 1775 and Rs 1500 odd levels. Thus, it has formed a base for next leg of the rally.
Last week stock witnessed breakout on the upside indicating the start of fresh uptrend on the stock. The Average Directional Index (ADX) line, an indicator of trend strength has moved above the equilibrium level of 20 with rising Plus Directional line on the daily chart.
Thus, stock can be bought at current levels and on dips to Rs 1785 with stop loss below Rs 1735 for the target of Rs 2050 levels.
The author is Head of Technical and Derivatives, Sanctum Wealth Management
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