Shabbir Kayyumi
Formation of bullish Hammer candlestick pattern on weekly timeframe signals the possibility of continued strength amid global uncertainty. Low of the Hammer at 11,900 should act as important support on an immediate basis.
Bollinger Band a volatility indicator, is having its both bands flat suggesting a rangebound movement between 12,240-11,900 levels and a decisive close on either side of bands will give volatility breakout.
Moreover, markets are trading around 20 DMA since the start of the February month which is currently placed around 12,050 exhibiting more of tight movement in a range.
A developing Inverse Head and Shoulders pattern on daily time frame breakout will come on a daily close above 12,250 for higher targets of 12,550 levels and on the contrary side, any close below 11,900 will negate this pattern.
Nevertheless, a Parabolic SAR trading system is in a buy mode currently in daily, weekly and monthly time frame indicating its buy on dip market and any dip towards 11,950 levels should be used as a bargain-hunting opportunity whereas sell signal will be activated only below 11,900 levels.
Bank Nifty has formed a Hammer pattern on the weekly time frame and any close above 31,100 levels will confirm trend reversal in the mid-term. The index needs to hold 30,700 to witness a higher move towards 31,300.
Here is the list of three stocks which could return 8-15 percent in short term:
Galaxy Surfactants: Buy around Rs 1,640 | Target: Rs 1,900 | Stop Loss: Rs 1,490 | Upside: 15 percent
The stock had been undergoing a sideways consolidation earlier and it has broken the tight range recently. The re-test of the breakout saw demand at lower levels and the stock now looks poised for further upside.
The momentum oscillator RSI is in a positive territory and it is entering into a trending phase. Moreover, it's currently trading at a ten week high indicating buying interest in the stock. We recommend a buy in Galaxy Surfactants around Rs 1,640 keeping a stop loss of Rs 1,490 for the target of Rs 1,900 mark.
Bharat Electronics: Buy around Rs 83 | Target: Rs 94 | Stop Loss: Rs 79 | Upside: 13 percent
Scrip is undergoing a consolidation in the longer time frame and is on the verge of resuming its prior trend. Formation of double bottom price pattern on daily chart suggests short term momentum to the uptrend.
The momentum indicator MACD has crossed the signal line indicating a start of a trend. Positive divergence in RSI indicating positive momentum on north side. We recommend a buy in BEL around Rs 83-85 with a stop loss of Rs 79 and aim for a target of Rs 94 and Rs 98 levels.
ICICI Bank: Buy around Rs 539 | Target: Rs 580 | Stop Loss: Rs 519 | Upside: 8 percent
The stock is in an uptrend and after forming higher tops and higher bottom on the weekly chart, it went into consolidation mode. After a week's negative to sideways correction, the stock is showing a resumption of the uptrend.
Currently, it is trading above all crucial moving averages suggests bullish bias will continue further. Moreover, the momentum oscillator RSI is also sustaining above 9 DMA which is also looking favorable for price pattern. Thus, the stock can be bought at current levels and on dips towards Rs 539, with a stop loss below Rs 519, for the target of Rs 580 levels.
(The author is Head of Technical Research at Narnolia Financial Advisors.)
Disclosure: Narnolia Financial Advisors / Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks. The stocks recommended are based on our analysis which is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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