The Nifty is trading in a range of 10,700 – 10,900 zones and due to such range bound activities daily Bollinger band has contracted further. Hence, we are likely to see a high volatility in coming trading sessions, says Aditya Agarwal of Way2Wealth Brokers.
The Nifty saw decent profit booking during the initial part of the week, which was largely in line with our expectations. In our previous update, we highlighted that 10,929, which coincided with the bearish engulfing candle high, will act as a strong hurdle. It will be a daunting task for the bulls to surpass these levels immediately.
Looking at the weekly chart, the relative strength index (14) has a signalled a bearish range shift. The Nifty once again broke its previous weekly low of 10,755 and eventually closed below the same on Thursday.
The index is broadly trading in a 10,700–10,900 range, due to which the daily Bollinger band has contracted further. Hence, we are likely to see high volatility in coming trading sessions.
On the lower side, 10,700 will act as immediate support and any sustainable move below this will drag the index lower towards the 10,600–10,550 zone. On the higher side, last Thursday’s gap area of 10,834–10,843 will act as a near term hurdle whereas a strong hurdle is placed at 10,929 levels.
Here is a list of top three stocks which could give 6-9% return in the next 15-20 sessions:
Havells India: Sell around Rs 537 – 547 | Target: Rs 485 | Stop loss: Rs 579 | Return: 8.8%
Havells India has been consolidating in a range and formed a symmetrical triangle pattern on weekly charts. The said pattern will be activated once stock beaches the lower band of the trend line which is pegged near Rs 530.
On a weekly chart, the RSI (14) has signaled range shift which indicates a probable breakdown in the near term. On a daily chart, the daily RSI (14) continued to resist near 60 levels.
Also, the last week candle resembles a formation of ‘Long-legged Doji’ candle which indicates indecision.
Combining the above technical evidence, we recommend traders to go short in a range of Rs 537 to 547 with a price target of Rs 485. Stop loss should be placed at Rs 579 on a closing basis.
Jindal Steel & Power: Sell at Rs 225 | Target: Rs 205 | Stop loss: Rs 236 | Return: 9%
Jindal Steel & Power has formed a Triangle pattern on the daily chart and last week stock confirmed its breakdown from said pattern. The daily Bollinger band has started expanding and that indicates the volatility is likely to increase from current level.
Hence, we advise traders to short this counter at the current level of Rs 225 with a price target of Rs 205. Stop loss should be placed at Rs 236 above which our bearish view will be negated.
Colgate Palmolive India: Buy around Rs 1,170 – 1,160 | Target: Rs 1,260 | Stop loss: Rs 1,125 | Timeframe: 15 to 21 trading sessions | Return: 6.3%
After posting a fresh all-time high of around Rs 1,269, Colgate Palmolive has seen a decent profit booking in the past few weeks and tested Rs 1,175 in Thursday’s trade.
Looking at the daily chart, 50 percent retracement of its entire swing move from the bottom of Rs 1,074 to the top of Rs 1,269 comes near Rs 1,170.
Also, the previous swing high of Rs 1,153 and Rs 1,157 formed on mid-September 2017 and late January 2018 which was earlier acting as a stiff hurdle will now act as a strong support zone for the stock. The daily RSI (14) has approached towards 40 levels.
Considering the above technical parameters, we recommend traders to add this stock in a range of Rs 1,170 to Rs 1,160 with a price target of Rs 1,260 and a stop loss placed at Rs 1,125.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.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.