Nifty to find support at 10,000; 3 stocks which can give up to 8% return

From the derivative side, we have seen a short build up in the Nifty and Bank Nifty Futures’ during the last couple of days with sharp fall in the Nifty and Bank Nifty.

Moreover FIIs also created net short positions in the Index Futures’ and Stock Futures’ segment during the last week

Put call ratio also fell sharply to 1.04 level from 1.23 levels during the last couple of days on the back of aggressive Call writing at 10,200-10,300 levels, indicating that on the higher side Nifty would find strong resistance in the vicinity of 10,200-10,300 level.

On the lower side Puts have been written at 9,900-10,000 level. Considering the evidence discussed above, our advice would be to remain short till Nifty closes above 10,300 levels. On the lower side Nifty may find strong support in the vicinity of 9,900-10,000 level

Here is a list of top three stocks which can give up to 8% return in short term:

Bata India Ltd: SELL| Target Rs. 645 | Stop-loss Rs 695| Return 5%

Bata India Ltd reversed southwards after forming a Double Top around 735 levels to close below its 2000-DMA with a surge in volumes. The stock price is forming a bearish lower top lower bottom pattern on the Daily charts since November 2017.

The momentum indicators and Oscillators like MACD and RSI are showing weakness on the daily chart. In the derivatives also, we have seen short positions being built. Therefore, we recommend selling Bata India for the downside target of Rs645 and a stop loss below at Rs695.

L&T Finance Ltd: SELL| Target Rs145 | Stop-loss Rs 165| Return 8%

After making an all-time high level of 214 in the month of October last year, the stock has been witnessing selling pressure at higher levels. It fell by about 27 percent from the recent high.

The stock price is currently trading below its 5, 20 and 200-DMA indicating that the short to medium term trend is negative.

It also broke the support of the upward sloping trend line adjoining the bottoms of 05 Feb 2018 and 07 March 2018, indicating weakness in the short term.

Oscillators and momentum indicators are showing weakness on the weekly and monthly charts. The level of 165 seems to have become the cap for short term and the recent pullback from the low seems to be an opportunity for traders to initiate fresh shorts.

M&M: BUY| Target Rs. 780 | Stop-loss Rs 721 | Return 5%

M&M reversed northwards after forming a Double Bottom around 700 levels to close above its 5 and 20-DMA. This double bottom level of 700 also coincides with the 200-DMA which is currently placed at 704 levels.

Therefore the significance of 700 levels as a support is very high. In the recent market correction, the stock price has been holding well and also holds bullish trend on the daily chart.

The stock price is trading above its 20, 50, 100 and 200 DMA, which indicates bullish setup for medium to long term. Oscillators and momentum Indicators showing strength on the medium-term chart.

Disclaimer: The author is Technical & Derivatives Analyst at HDFC Securities. 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.