Ashish Chaturmohta
After the gap up opening, Nifty was rangebound for the first half of the session and picked up traction in the latter part. The index closed at 10,763, up by 0.76 percent for the day. Market breadth on NSE was neutral with one stock advancing for every decline.
Broader market indices BSE Midcap and Smallcap underperformed the benchmark gaining 0.35 percent and 0.36 percent, respectively. The Nifty has been facing resistance above 10,600 and consolidating below it for the last couple of weeks.
After breakout from the range on the last Friday, the index has seen followthrough action on Monday. It has also crossed long-term 200-day moving average and closed above it marginally. The index is likely to fill the October 24 falling gap area resistance of 10,750-10,850. Crossing and sustaining above 10,850, the market is likely to rally towards 11,090 which is the 61.8 percent Fibonacci retracement of the fall from 11,760 to 10,004. On the downside, the immediate support is seen at 10,600 and 10,450.
In Nifty options, maximum open interest for Puts is seen at strike price 10,000 followed by 10,200. For Calls, it is seen at strike price 11,000 followed by 10,800. Good amount of Put writing was seen at 10,700 followed by 10,600 and 10,500 suggesting base for the market is moving higher, while some Call writing was seen at 11,000 along with minor unwinding at 10,700, 10,600 and 10,500.
India VIX increased by 5 percent to close at 19.25. A further rise in VIX is likely to cap the gains in markets and trade in a range. VIX needs to move lower for the market to move higher.
Here are the top stock trading ideas which can give good returns:
NRB Bearings: Buy | CMP: Rs 196 | Stop loss: Rs 185 | Target: 230-235 | Return: 20 percent
The stock has been trading in a range of Rs 190 on the upside and Rs 150 at the lower end for the last 11 months. On Monday, the stock witnessed breakout from this range on strong momentum indicated by a long bullish bar and high volumes.
Price has given a breakout on the upside from Bollinger Band with an expansion of bands indicating a continuation in trend in the direction of breakout on the daily chart. Momentum indicators are in bullish mode on daily as well as on weekly charts.
Thus, the stock can be bought at the current level and on dips to Rs 192 with a stop loss below Rs 185 for a target of Rs 230-235.
Aurobindo Pharma: Buy | CMP: Rs 794 | Stop loss: Rs 755 | Target: Rs 900 | Return: 13 percent
The stock hit an all-time high of Rs 895 in the month of October 2016 and then declined to Rs 500 from where it rallied back to Rs 809. After hitting a high of Rs 809 in November last year, it again tested its previous low and has seen rally from a low of Rs 527. In the process, the stock has formed a bullish W-shaped bottoming pattern on the weekly chart.
For the last couple of months, the stock has been trading in sideways range consolidating it gains below breakout level suggesting breakout on the upside. MACD line has given positive crossover with its average on the weekly chart. Relative strength index and Stochastic have given positive crossover with their respective averages on the daily chart.
Thus, stock can be bought at the current level and on dips to Rs 780 with a stop loss below Rs 755 for a target of Rs 900.
Larsen & Toubro: Buy | CMP: Rs 1,417 | Stop loss: Rs 1,360 | Target: Rs 1,600 | Return: 13 percent
The stock touched high of Rs 1,470 in February this year and has been moving sideways to negative correction mode between Rs 1,470 and Rs 1,182 for the last nine months. Now, L&T has crossed falling resistance trend line connecting highs of Rs 1,470, Rs 1,425 and Rs 1,390 on the weekly chart and continues to trend higher. Thus, signalling an end of correction with a sharp rally from lower levels.
Momentum indicators are in bullish mode on daily as well as on weekly chart. Thus, the stock can be bought at the current level and on dips to Rs 1,390 with a stop loss below Rs 1,360 for a target of Rs 1,600.
Reliance Industries: Buy | CMP: Rs 1,150 | Stop loss: Rs 1,010 | Target: Rs 1,250 | Return: 9 percent
After touching high of Rs 1,329 in September, the stock has seen a correction down to Rs 1,016. It has retraced 61.8 percent Fibonacci retracement of the rise from Rs 880 to Rs 1329. Also, the price has taken support at long-term 200-day moving average and seen a bounceback.
RIL is witnessing double bottom formation at support levels on the daily chart. Price has given a breakout on the upside from Bollinger Band with an expansion of bands indicating a continuation in trend in the direction of breakout on the daily chart.
Thus, the stock can be bought at the current level and on dips to Rs 1,135 with a stop loss below Rs 1,010 for a target of Rs 1,250.
Voltas: Buy | CMP: Rs 562 | Stop loss: Rs 535 | Target: Rs 650 | Return: 16 percent
The stock has been in decline mode after an all-time high of Rs 675 in December last year. It touched low of Rs 472 last month, retracing 50 percent of the major rise from low of Rs 287 to high of Rs 675. The stock after consolidating for few weeks at lower levels has seen a bounceback to current levels. It has been forming higher tops and higher bottoms from the low on daily chart.
MACD line has moved above the equilibrium of zero on the daily chart. Thus, the stock can be bought at the current level and on dips to Rs 550 with a stop loss below Rs 535 for a target of Rs 650.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Disclaimer: The author is Head of Technical and Derivatives at Sanctum Wealth Management. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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