Arpan Shah Monarch Networth Capital
The Nifty broke above its important resistance zone last week and is currently trading with a positive bias. Now, the support level for the index has moved up to 10,700 from 10,500 earlier.
We have multiple events during the month like the RBI policy, the Fed meet, the OPEC meet, results of state elections, and UK Parliament voting on Brexit.
So over the month, headline movement can be volatile and choppy, but if the index dips to 10,700, it will present a buying opportunity. On the upside, the Nifty can rise to around 11,100 in the December series.
The banking and finance sector can remain volatile due to multiple events, but the pharmaceutical sector can outperform the index. We believe select pharma names like Cipla, Aurobindo Pharma and Dr Reddy's Labs present good investment opportunities at their current prices.
Investors can also look for quality NBFC companies like L&T Finance Holdings and Bajaj Finance, which are still available at reasonable valuations.
The Nifty Smallcap index underperformed the Nifty in the November series, but in month of December, it can go the other way. After its recent up move, the Smallcap index has been consolidating between 6,150 and 6,350.
A breakout above 6,350 will take the index towards 6,700-7,000. At their current prices, individual small-cap stocks can be good for trading as well as investing for the long term.
Here are 5 stocks that could return 7-14 percent in the short term:
NIIT Technologies: Rs 1,120| Rating: Buy | Target: Rs 1,215 | Stoploss: Rs 1,080 | Return: 8.2%
We have seen sharp short covering rally in large cap IT stocks in the last week but midcap IT names still haven't performed. NIIT Tech has made double bottom formation at Rs 1,040 levels and bounced from this levels.
Currently it is trading above its 200-day moving average (SMA) which is a positive sign. MACD has also given positive crossover.
Endurance Technologies: Rs 1,120| Rating: Buy | Target: Rs 1,260 | Stoploss: Rs 1,060 | Return: 12.5%
It has made double bottom formation right at the previous support zone. This level is also merging with change of polarity line (Previous resistance turning support).
If it continues its upward momentum then 38 percent retracement of recent fall will take it towards Rs 1,260 level.
Reliance Capital: Rs 232| Rating: Buy | Target: Rs 260 | Stoploss: Rs 215 | Return: 12%
Stock has bounced back multiple times from Rs 220 level and trying to defend this level. Though high risk it has a high probability of bouncing back towards Rs 260 from its current level. It can bounce back towards its 50-day moving average in coming days.
Page Industries: Rs 25,840| Rating: Buy | Target: Rs 28,500 | Stoploss: Rs 24,700 | Return: 14%
It has fallen till its multi week support zone. This level used to be strong resistance zone in the past and now it has become support for the stock. It can bounce back sharply from current levels.
Pidilite Industries: Rs 1,162| Rating: Sell | Target: Rs 1,085 | Stoploss: Rs 1,200 | Return: 6.8%
It has faced resistance twice at 1180 level and this time again it has corrected from this level. RSI is showing strong negative divergence on weekly chart. If it doesn’t breach Rs 1,200 level then it is heading below 1100 level.
Disclosure: Analyst does not have any direct or indirect financial interest nor any other material conflict of interest at the time of stock recommendation in the subject company. He does not have actual/beneficial ownership of one percent or more securities of the subject company. He does not own any stocks however his relatives might own a few of the stocks in their portfolio.
Disclaimer: The author is a Technical Analyst at Monarch Networth Capital. The views and investment tips expressed by investment expert on moneycontrol.com are his 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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