Dinesh Rohira 5nance.com
The Indian equity market continued its winning streak with a gain of about 0.75 percent on a week-to-week basis and managed to sustain its upward rally ahead of tomorrow’s August F&O expiry. Ahead of this expiry session, the Nifty on Tuesday registered a fresh high of 11,760, despite a negative market breadth, and ended the session at a record close of 11,738.
Regardless of a drag on select banks and FMCG, the buying regime in energy and IT space assisted the index to break out to uncharted price levels. After forming a small bullish candlestick pattern on daily chart in the previous session, the index made a ‘Doji’ kind of a pattern as it managed to rebound near its opening level after profit-booking at higher levels.
The daily relative strength index stood at 75 indicating a positive divergence while the moving average convergence divergence continued to trade above the signal line. The index is likely to face resistance at 11,835-11,768 levels as per pivot point, while support level is placed at 11,570.
However, with the internal advance-decline ratio indicating a negative stance, the profit-booking regime is expected to halt the momentum which was visible in the current session. We advise investors to remain stock specific with a strict stop-loss on longs. We expect the Nifty to trade around 11,810 on upside and 11,670 on the downside on a weekly basis.
Here is a list of top three ideas which could return 4-12 percent in the next 1 month:
Welspun Corp Ltd: Buy| Target: Rs 187 | Stop-Loss: Rs 152 | Return 12%
The Welspun Corp formed a two lower base of 131-104 levels on its six-month price chart from a higher level of Rs 190-170. Recently, the scrip witnessed a reversal trend favoring upward trajectory where it managed to breakout from the long-term average level of 141 which was critical resistance and also witnessed a significant volume growth (above daily average).
The weekly RSI level at 63 has shown a positive price divergence while MACD recently witnessed a bullish crossover. We have a BUY recommendation for Welspun Corp. which is currently trading at Rs. 166.70
TVS Motor Company Ltd: Buy | Target: Rs. 605| Stop-Loss: Rs. 553 | Return 6%
During the last six months, TVS Motor consolidated from Rs 680 levels towards a low of Rs 512 forming multiple lower bottom. However, during a recent period, it resumed upward rally, taking a strong support at Rs 512 levels.
It also managed to breakout from 100-days moving average level placed at 549 and formed a substantial volume growth.
The momentum indicator indicated a positive trend with RSI at 62 levels, while MACD is likely to make a bullish crossover in the next few sessions. We have a BUY recommendation for TVS Motor which is currently trading at Rs. 569.50
New India Assurance: Sell | Target: Rs. 235 | Stop-Loss: Rs. 265 | Downside: 4%
Despite witnessing a false breakout during the opening session this week, New India Assurance continued to consolidate over the last six-month period from the highs of Rs 373 levels.
It further slipped below 200-days moving average level placed at Rs 329 levels, indicating a negative trajectory for the scrip.
The volume growth remained subdued throughout the session as momentum indicator continued to indicate consolidation phase. We have a sell recommendation for New India Assurance which is currently trading at Rs 244.75
Disclaimer: The author is Founder & CEO, 5nance.com. 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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