Narnolia Financial Advisors
After opening higher near 100-DMA (10,950) last week, Nifty slipped lower and traded below 200-DMA (10,750); however, state election results due on Tuesday will be important for charting market direction in the near term.
Although Nifty has been making lower highs and lower lows on the daily chart from last five days signaling bears having an upper hand, the benchmark index is still trading above crucial support levels.
Nifty is trading in a broadening rising wedge pattern on daily time frame; lower trend line of the wedge comes around 10,578 and upper trend line is near 11,055. It remains near-term trading range for the market.
Weekly RSI oscillator is also trading around 50 marks almost from last two weeks and flat Bollinger Bands suggest consolidations in this range too. Derivative open interest data also suggests a similar range.
However as the market is awaiting series of events to unfold like state election results, US Fed policy and UK parliament vote on modalities of Brexit would remain susceptible to major swings based on the news.
Banking index is trading above all short-term moving averages, 200-DMA (26,034), 50-DMA (25,600) and 20-DMA (26,300) indicate bullish bias. The short-term and mid-term trend is positive and immediate resistance is around 27,200 and support around 26,100.
Bank Nifty has a clearer long bias on the chart than Nifty, so trader looking for a long opportunity should prefer Bank Nifty.
Here are the top stock trading ideas which can give good returns:
Tata Steel: Buy around: Rs 509 | Target: Rs 570 | Stop loss: Rs 479 | Upside: 12 percent
After hitting the peak of Rs 610, the stock slipped lower till Rs 500. From this price, chances of developing of demand is higher and has been trading in a range bound zone of Rs 500 and Rs 520.
Currently, the stock is trading near its multi-support horizontal line and point of polarity on weekly chart is giving cues to accumulate this stock at lower levels.
Positive divergence in RSI on daily chart and declining histogram in MACD suggest upside momentum. As long as it sustains above Rs 480, possibility of moving on upside is higher and it can hit our first target of Rs 570. We recommend buying Tata Steel at Rs 509 with stop loss of Rs 479 for target of Rs 570.
Vedanta: Buy above Rs 198 | Target: Rs 221 | Stop loss: Rs 189 | Upside: 12 percent
Daily chart of Vedanta reveals that demand is increasing and supply is diminishing. Rising trend line from lower levels is displaying trend reversal and creates buying opportunity at current juncture. As of now, the stock is taking support from its broadening wedge support line which augurs well for the bulls and indicates surge on the upside.
Positive crossover in MACD signals optimism, suggest upside move in the counter in coming sessions. We suggest buying Vedanta above Rs 198 with stop loss of Rs 189 for target of Rs 221.
Wipro: Buy around: Rs 325 | Target: Rs 355 | Stop loss: Rs 309 | Upside: 9 percent
Wipro has been moving in a strong bull trend since long. It has given trend line breakout on daily chart which suggests a strong momentum on up side. Currently, it is moving above all its important moving averages.
Sustainability of RSI above 60 is also favorable for the scrip. One can buy the scrip around Rs 325 with the stop loss of Rs 309 for the target of Rs 355.
Infosys: Buy around Rs 682 | Target: Rs 735 | Stop loss: Rs 655 | Upside: 8 percent
Emerging Inverted Head & Shoulder on daily chart is showing that the stock has bottomed near it lower levels. Strong support is near its 50-DMA on the daily chart, showing upside momentum remains intact.
Positive crossover in MACD is also favoring price action. Breakout is expected to come above Rs 686-689 where buying momentum will accelerate towards our target of Rs 725.
Buy Infosys around Rs 689 with the stop loss of Rs 655 for the target of Rs 725.
MRF : Buy around Rs 65,575 | Target: Rs 69,000 | Stop loss: Rs 64,444 | Upside: 5 percent
MRF after giving a decent fall, seems to be trading above channel resistance line. Consistent formation of bull candle near its support line givies a hope to bulls for making long position in the scrip.
Currently, the stock is retesting its double bottom neckline which is giving opportunity to create long position in the scrip. Weekly chart is showing parity with its historical levels. Bullish crossover in MACD is also lending support its price action. One can go long around Rs 65,575 with the stop loss of Rs 64,444 for target of Rs 69,000.
The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.Disclaimer: 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.Assembly Elections 2018: Read the latest news, views and analysis here