Sacchitanand Uttekar
Nifty50 registered its 4th 'Homing Pigeon' candlestick formation today since its first been established around the base of ongoing trend around 7,511. The recent pattern occurrence confirmed the elevated base & its 'make or break' level to be marked now at 11,111 for the ongoing upmove.
The index has been consolidating within the 'Broadening formation' since last few weeks & today's breakout from its recent consolidation has been well supported with volumes as it helped the index register a strong close near its high point of the day.
As highlighted earlier, too, technically we believe the index is expected to swing above the upper bound of the 'Broadening formation (11,377)' & move towards 11,500 zone swiftly. While weakness if any would need validation below 11,100 from hereon. As Broadening formation is a consolidative pattern occurring in the final stages of the upmove, it is ideal to remain cautious & restrict trades to short term itself with more emphasis on stock specific trade setups.
Major trend weakness or distortion would only be valid once below 11,100 from hereon for any larger degree corrective move towards 10,880 until then expect ongoing upmove to continue towards 11,500.
Here is are three stocks that could return 7-16 percent in short term:
Thermax: Buy | Target: Rs 900-920 | Return: 14-16 percent
Breakout above its 10-week of consolidation with its corresponding RSI value moving above its 50 mark for the first time since January 2020 is a healthy sign of reversal. Positional longs with a stop below Rs 770 could be considered for a rebound towards Rs 900-920 zone.
Biocon: Buy | Target: Rs 440 | Return: 11 percent
Strong sectoral performance, occurrence of a 'Bullish Harami' formation at the base of the ongoing wedge formation provides a good opportunity to add longs. Upper end of the 'Falling Wedge' formation is placed around Rs 410, above which the stock could witness a significant rally scaling back towards its life high. Trading longs could be considered from here on with a stop loss below Rs 382 for a rebound back towards Rs 440.
United Breweries: Buy | Target: Rs 1,077 | Return: 7 percent
Occurrence of a 'Morning Star' formation post the announcement of its quarterly results; coupled with a positive crossover of its short term moving averages of 5 & 20 EMAs is an early sign of upcoming momentum. Trading longs could be added with a stop below Rs 975 for an initial upmove towards its 200 DEMA been placed around Rs 1,077.
The author is DVP – Technical (Equity) at Tradebulls Securities.
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