ICICI Direct.com Research
The Nifty50 is seen marking time near 10,400 level over the last few sessions as it scales back from its short-term overbought conditions generated by 300-point rally during the last week.
While this may lead to a temporal pause in upward momentum, we believe current round of profit booking will make the market healthier by working off short-term overbought conditions.
Structurally, the rally from the September 2017 lows (9,687 to 10,451 = 764 points) is larger in magnitude compared to the preceding rally of July-August 2017, measuring 689 points.
The rally getting bigger highlights inherent strength in the trend amid persistent demand at elevated levels and augurs well for the continuance of the up move going forward.
We expect the index to eventually head towards the target of 10,600 level in the coming weeks as it is the measuring implication of the Bullish Double Bottom pattern formed during the August – September period.
The low of Bullish Hammer formed at 10,100 during early November 2017, remains a key immediate support for the Nifty. The support area of 10,100 levels is marked by the confluence of following:- Bullish gap area leading to the breakout from three-month range is placed around 10123-10096 region
- 50% retracements of current up move (9687-10490) are placed at 10094 levels
- Equality of preceding decline (10178-9687=491 points) as calculated from life high of 10490 is placed around 10000 levels
- The major trendline support joining the lows of December 2016 (7894) and September 2017 (9688) placed around 10100 levels
Here is a list of top 3 stocks which could give up to 18% return in the next 6 months:
Symphony: BUY| CMP Rs1632| Target Rs1920| Stop Loss Rs1490| Return 18%| Time Frame 6 month
The share price of Symphony remains in a long-term structural uptrend as defined by the rising peaks and troughs on the long-term price charts.
The recent price action has resulted in a breakout from the major consolidation of over two years thereby signalling the resumption of a primary uptrend and provides fresh entry opportunity to ride the next up move over the medium term.
The entire secondary consolidation phase since the life-time high of Rs1637 in April 2015 till date represents a bullish Cup & Handle formation as highlighted in the adjoining weekly chart.
A cup and handle formation is a bullish continuation pattern, which marks a secondary corrective phase within the larger degree uptrend.
The strong up move in the current week has led the share price above the neckline of the bullish cup and handle pattern around Rs1550, thereby, signalling the end of the long-term consolidation phase and implies resumption of the primary uptrend.
Based on aforementioned technical observations, we believe the stock is likely to test levels of 1925 being the minimum measuring implication of the bullish cup and handle pattern i.e. the width of the handle (1570-1215=355 points) as projected from the breakout point of Rs1550 provides upsides towards 1925 over a medium-term horizon
GlaxoSmithKline Consumer: BUY| CMP Rs6109| Target Rs6700 | Stop Loss Rs5780| Return 10%| Time Frame 6 months
The share price of GlaxoSmithKline Consumer remains in a structural uptrend as it continues to stride northward in a rising peaks and troughs manner. Currently, the stock is seen emerging out of a two-year-long corrective phase that forms part of the larger degree uptrend.
We believe the stock is set to embark upon its next major up move, going forward. Therefore, it provides a good buying opportunity for medium-term investors
The stock entered into a secondary corrective phase after hitting a lifetime high of Rs6800 in December 2015. The price wise correction halted precisely near the key value area of Rs4900 being the 61.8% Fibonacci retracement of the 2013-15 rally (Rs3800 to Rs6800).
The stock witnessed a steady base formation around Rs4850-4900 region towards the end of 2016 before gradually rising to a high of Rs5780 by August 2017. The ensuing correction saw the share price once again revisit the value area of Rs4850-4900 in September 2017.
The two identical lows formed in December 2016 and September 2017 represent a bullish Double Bottom formation highlighting strong demand at the key value area.
We believe the stock has concluded a healthy corrective phase and is set to embark upon its next up move going forward. We expect the stock to head towards our target of Rs6700 in the medium term as it is the measuring implication of the Double Bottom pattern i.e. the neckline and base of the pattern (5780-4850=930 points) added to the breakout point of Rs5780 projects upside towards Rs6700.
South Indian Bank: BUY| CMP Rs33.00| Target Rs38| Stop Loss Rs30| Return 15%| Time Frame 3 months
South Indian bank has been in a steady uptrend in the CY 2017 characterized by sharp rallies and shallow corrections signalling positive price structure.
The stock on Wednesday’s session registered a resolute breakout above a falling trendline joining the highs 25th October 2017 (Rs33.25) and 21st November 2017 (Rs32.15) signalling a resumption of up move after last two months consolidation.
The breakout from the trendline resistance was accompanied by a strong volume of almost double of the 200 days average volume of 1.6 crores signalling larger participation in the direction of the trend.
We expect the stock to rally towards 38.00 in the coming months being the 138.2% price extension of the previous up move from Rs27.40 to Rs33.25 as projected from the recent trough of Rs29.70 signals upside towards 38.00 in the short termDisclaimer: The author is Head Technical, AVP at ICICI Direct.com Research. 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.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .