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Last Updated : Jul 28, 2017 09:49 AM IST | Source: Moneycontrol.com

Nifty slips below 10K; top 4 stocks which can give up to 13% return

Though yet to face any unsettling events in 2017, rallying 27 percent till date, Nifty is likely to embark on a treacherous voyage from here on, grappling with multiple gann supply points.

 
 
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By Pritesh Mehta

IIFL Private Wealth

In a weary turn of events, Nifty lost its early morning impetus that had earlier helped it scale the peak of 10,115. Suffering a sharp fall, it eventually closed flat at 10,020.

The ensuing bearish meeting line candlestick pattern now hints at a possible consolidation on the heels of the recent agile up moves.

Close

The fall could have been even nastier for Nifty, had HDFC and HDFC Bank not stood out with gains of 6 percent and 2 percent respectively.

The Nifty breadth showed 33 stocks declining against an advance of 18 stocks. Despite the poor Nifty breadth, higher weightages of HDFC twins arrested the damage.

Other index components however locked horns with crude realities at the top. Clearly, few select stocks are leading the markets higher as broad based participation has gone amiss in the uncharted zone.

Though yet to face any unsettling events in 2017, rallying 27 percent till date, Nifty is likely to embark on a treacherous voyage from here on, grappling with multiple gann supply points.

Three-digit gann number of 101(00), four digit gann number of 1009(0) and multiplication of 360 degrees by applying a square of 9 from the significant low of 9,342 is also placed around 10,130.

On higher time frame charts, PRZ of potential ABCD pattern stands near 10,050 mark. So, the point of confluence is seen between 10,050-10,130.

Here is a list of top 4 stocks which can give up to 13% return in short term:

South Indian Bank: BUY| Target Rs34| Stop LossRs29| Return 13%

South Indian Bank saw a sharp up move from April 2017 to June 2017 (from Rs21-Rs30). Post that, it witnessed sideways consolidation between Rs30 and Rs27. Recent consolidation took shape of a pennant.

Post the confirmation of pennant formation on the daily chart, the stage is set for the stock to rally higher towards Rs34 in the near term. The stock has seen good performance in this month’s trade holding on to the key support of its 35-DMA.

A descending trend line extended from the peak of June has been pierced on the upside, thus putting an end to its short term correction. We expect the stock to witness follow-up buying and add to the 7 percent move seen in this week’s trade.

Based on above rationales, we recommend a buy on South Indian Bank between Rs30-50-31 with a stop loss of Rs29 for a target of Rs34.

Bharat Financial Inclusion: BUY| Target Rs890| Stop Loss Rs795| Return 8%

It is a channeling stock with an upward tilt. Price movement since June 2017 is controlled by two parallel trend lines. The primary ascending trend line connects consecutive higher lows (which has acted as a solid support on every decline).

Then, the secondary trend line is also ascending as it connected consecutive higher highs. On numerous occasions, upon reaching the lower trend line, the stock has provided strong pull back as seen in last week of June and the first week of July.

In this week’s trade, it made a break above the upper trendline, suggesting an increase in momentum on the upside. On the weekly chart, the stock is on the verge of breaking past the resistance of downward sloping trendline.

A move above Rs825 would confirm a breakout on higher time-frame, the corroborating positive structure on multiple time-frames. Based on above rationale, we recommend a buy between Rs820-825 with a stop loss of Rs795 for a target of Rs890.

Voltas: BUY| Target Rs550| Stop Loss Rs500| Return 7%

It attempted lifetime new highs in Thursday’s trade. Chart structure of last won months clearly highlights that the stock had been consolidating at the top. Any kind of consolidation in an up trending stock at the top is considered as bullish in nature.

Retracement on the downside in June is considered as a dip in an ongoing uptrend. As the stock retraced 61.8 percent of the previous up move it resumed its ascend.

During the corrective phase, it found support around lower-end of current gann channel, keeping the positive structure intact.

A move above Rs529 would lead to a shift in the orbit on the upside. So, keeping in mind above-mentioned observations, we recommend a buy on Voltas above Rs515 with a stop loss of Rs500 for a target of Rs550.

IOC: SELL| Target Rs345| Stop Loss Rs380| Return 6%

The stock is showing classic signs of topping out. After forming multiple peaks around Rs450 in May 2017, the stock has underperformed and has been steadily moving lower, breaking below important support levels.

In this week’s trade, it also confirmed a break below the support of its 35-Weekly moving average. This critical moving average was acting as a strong support since May 2016.

The point of polarity support is placed around Rs370. A fall below the same would lead to a sharp acceleration in the downside movement. Moreover, it is facing resistance at its downward sloping trendline, which suggests that short-term rallies have proved to be short-lived.

A fall below Rs361 would result in a shift in the orbit on the downside. We recommend investors to short IOC Aug Futs below Rs370 with a stop loss of Rs380 for a target of Rs345.

Disclaimer: The author is Head of Technical Research at IIFL Private Wealth. 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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First Published on Jul 28, 2017 09:49 am
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