By Aditya Agarwal
The markets opened on a positive note this week but Nifty failed to hold on to its 200-DMA and saw a sharp correction in the last 3 trading session that dragged the index below 10,600. The Nifty50 closed at the week’s low level of 10,526 down by almost 1.46 percent.
Broad-based selling was seen in cement, pharma, technology and metal stocks that kept indices under pressure. Selective buying interest was seen in auto and banking sector but in Thursday’s trade, ahead of Bank Nifty weekly expiry, profit booking was seen in banking share that dragged the index below 26,000 levels.
Overall, the short-term outlook for the index remains week and we expect the Nifty to test 10,440 levels on the lower side. However, if Nifty manages to breach 10440 and sustain below that level then the than index can see some deep cuts and in that scenario 10250/10140 will be next to possible targets.
However, on the higher side, the upside seems to be limited from current levels. Call writing at 10600-10700 zone will prove as stiff supply zone for the indices.
Being the expiry week, markets will remain volatile and a break below its crucial support of 10,440 can further strengthen the bears.
On contrary, if Nifty manages to hold above 10500-10440 zone, then short covering move can be seen that can drive index towards 10600-10650 levels before expiry.
On sectoral front FMCG, PSU Banking, midcap technology, and auto looks positive and can provide much-needed support to indices at lower levels.
Here is a list of top three stocks which could give 6-14% return in next 1 month:
ZEE Entertainment: Buy around Rs 455-452 | LTP: Rs 458 | Target: Rs 475/484 | Stop Loss: Rs 438 | Return 6%
Zee entertainment has been consolidating in a broad range of Rs 455-420 for the last few weeks. However, in Thursday’s trade, the stock broke its stiff resistance zone of Rs 455 and closed above that.
On the daily chart, the stock was facing stiff resistance around its 50-DMA (Rs 450 levels) and a close above that shows strength in the counter.
We expect, that stock will continue to see an upward movement on the back of short unwinding and in that optimism it can test Rs 475/585 levels in the short-term. Short-term traders can use any pullback in the counter to initiate long positions with a stop loss placed at Rs 438.
Sail: Sell around Rs 62-63 | LTP: Rs 60.40 | Target: Rs 55/52 | Stop Loss: Rs 67 | Return 14%
In the first week of November, Sail tested its resistance zone of 72 but failed to sustain above that. Since then, the stock is under bear pressure along with other metal stocks and in the last trading session, it closed below its crucial support zone of 62.
On the weekly chart, the stock is continuously making the lower top and lower bottom formations which clearly shows weakness in the counter.
Overall view on Sail remains bearish and any pullback towards 62 can be utilized to initiate short positions with targets of Rs 55/52 and a stop loss placed above 67.
Bosch: Buy around Rs 18,900-19000| LTP: Rs 19,007| Target 20,600| Stop Loss: Rs 18,400| Return 8%
Bosch saw a steep rally in the last week of October and made a high of Rs 20500. However, from that level, the stock saw profit booking and in that pessimism, it made the low of 18,465 last week.
Bosch has retraced almost 61.80 percent of the entire up move (17600-20500) it saw in October and is currently trading near its strong support zone of 18800-18900 levels.
In Thursday’s trade, the stock saw short covering from lower levels and closed almost at day’s high of 19,000. We expect that from current levels, the risk-reward ratio is clearly in favor of buyers and long positions can be initiated with targets of 20,600.
Disclaimer: The author Head of Technical Research, Way2Wealth Brokers Pvt. Ltd. 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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