Nifty gave a major trend line breakdown by diving below 11,575 and 100-DMA in the last week. The index formed a big body bearish candlestick pattern on the weekly timeframe indicating strong bearish forces.
Momentum oscillator stochastic is in oversold zone and the possibility of a bounce back from lower levels in coming sessions cannot be ignored. Recent double top pattern breakdown has a target of 11,340. Andrew pitchfork lower trend line is placed near 11,350 levels and monthly pivot point (S2) is also near 11,361 that suggest there is a confluence of supports in 11,300-11,350 range.
Any move below this strong support zone will trigger a move towards 11,100 marks where 200 DMA and line of parity is placed.
A lot of activity in FNO segment is seen, whereas the highest Open Interest (OI) in Put is around 11,300 strikes whereas maximum Open Interest (OI) in Call is around 11,600 suggesting an immediate trading range of 11,700- 11,300.
Bank Nifty
Bank Nifty traded lower throughout the last week, nevertheless looking at oversold oscillators on the lower timeframe and strong support of 100-DMA around 29,750, a possibility of a short term bounce back towards 5-EMA (30,400) is possible.
Here are top five stock ideas that can give good returns:
NTPC: Buy around Rs 126 | Target: Rs 146 | Stop loss:Rs 115 | Upside: 16 percent
NTPC took a sharp rebound on the upside after hitting the low of Rs 126 and started consolidating which turned in the formation of Double Bottom on the hourly chart. But the breakout of this continuous pattern is expected above Rs 132 from where it will gain momentum for proceeding towards the northward side.
Currently, it forms a strong base near its 200-DMA that comes near 128-Rs 129 level. Positive divergence in RSI and MACD are looking firm that indicates support at current levels.
One can go long in NTPC around Rs 126 for the target of Rs 146 with a stop loss of Rs 115.
Wipro: Buy around Rs 255 | Target: Rs 280 | Stop loss: Rs 239 | Upside: 10 percent
After hitting the peak of Rs 301, the stock slipped lower at Rs 255 then it turned back after forming a congestion zone on the daily chart.
Key support level is located near Rs 250. As long as it sustains above the same, the possibility of moving on the upside is higher and it can hit the target of Rs 280.
Buy Wipro around Rs 255 with a stop loss of Rs 239 for the target of Rs 280.
ACC: Buy around: Rs 1,520 | Target: Rs 1,620 | Stop loss: Rs 1,465 | Upside: 7 precent
After hitting the peak of Rs 1,769, the stock slipped lower at Rs 1,470. As of now, it is retesting its falling trend line on the weekly chart that is showing stability in the stock.
The declining histogram in MACD along with positive crossover below the central line is creating optimism in coming sessions. The key support level is located near Rs 1,545 where 200-DMA is seen.
As long as it sustains above Rs 1,465, the possibility of moving on the upside is higher and it can hit our first target of Rs 1,620 with ease.
Buy ACC around Rs 1,520 with a stop loss of Rs 1,465 for the target of Rs 1,620.
Dabur India: Buy around Rs 412 | Target: Rs 435 | Stop loss: Rs 395 | Upside: 6 percent
The stock has corrected from the peak of Rs 490 and currently, it has shown signs of bottoming around Rs 375-400. Formation of an inverted Head and Shoulder on the daily chart is showing a positive move on the upside.
The emergence of a long bullish candle while giving a breakout on the daily chart shows the possibility of a bounce-back further on the upside. With decent volume participation, we recommend a buy in this scrip around Rs 412 for an upside target of Rs 435 with the stop loss of Rs 395.
Larsen & Toubro: Buy around Rs 1,375 | Target: Rs 1,460| Stop loss: Rs 1,330 | Upside: 6 percent
The scrip seems to bottom near its retracement levels of Rs 1,405-1,410 from where it formed spinning bottom on hourly chart suggesting bounce back on the higher side.
The stock took support from its upward sloping line along with declining histogram in the negative territory of MACD on an hourly chart. The principle of polarity can provide strong support in coming sessions. Aforementioned rationale suggests buying in the scrip can be bought around Rs 1,375 for the target of Rs 1,460 with the stop loss of Rs 1,330.
The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.
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