Once Nifty starts trading near the 11,220 level, traders should start booking profits in order to avoid any losses in case of profit booking.
We have witnessed a historic week on the D-Street. The S&P BSE Sensex registered a new high of 40,688 and the Nifty50 spot closed above 12K mark.
Till now, during the week, the Nifty50 has been gradually rising and is up more than 1 percent so far. Meanwhile, the Nifty Bank index has been rising steadily in line with the Nifty index.
Going ahead, since Nifty50 closed above the 12,000 mark it has the potential to reach the target price of 12,200 levels. Even the daily RSI is above 70 which is in line with the price action.
The support on the downside has been shifted higher to 11,800 from 11,600. We would advise traders to hold their longs but with a strict stop loss of 11,800 in the Nifty.
At the same time, we would also like to highlight that the index has rallied from 11,100 till now without any meaningful correction.
Thus, once it starts trading near the 11,220 level, traders should start booking profits in order to avoid any losses in case of profit booking.
With regards to the Nifty Bank index, it is yet to decisively clear its previous swing high of 30,800. Going forward, only a move above that would reinforce the banking stocks for further rally.
Here is a list of three stocks which could give 4-8 percent return in the next three-four weeks:
Reliance Industries: Sell | LTP: Rs 1,458 | Target: Rs 1,390 | Stop Loss: Rs 1,500 | Downside 4.6 percent
The weekly chart of RIL shows that the recent rally got stuck near the Rs 1,500 mark which was the placement of rising trend line formed by joining the important swing highs of Rs 1,322 and Rs 1,410.
In addition, the stock made a new life high with a negative divergence on the weekly, as well as monthly RSI and this could be a sign of profit booking.
Also, the weekly stochastic oscillator is hovering in an overbought zone indicating exhaustion. Traders are advised to sell the stock near Rs 1,465 for the target of Rs 1,390, and a stop-loss of Rs 1,500. The time horizon is one– three weeks.
Apollo Hospitals: Buy | LTP: Rs 1,467 | Target: Rs 1,550 | Stop Loss: Rs 1,400 | Upside 5.6 percent
Since July 2018, the stock has been in a strong uptrend along with a perfect series of impulse and corrective move.
The recent dip from Rs 1,540 to Rs 1,393 can be termed as just a corrective move of the rally since the stock found support at the placement of rising trend line on the daily chart.
At the current price, the risk-to-reward ratio looks lucrative to go long for a decent upside. Traders are advised to buy the stock near Rs 1,450 for an upside target of Rs 1,550 with a stop-loss of Rs 1,400. The time horizon is one–three weeks.
Bharat Electronics: Buy | LTP: Rs 108.90| Target: Rs 118 | Stop Loss: Rs 103 | Upside 8 percent
Recently, BEL confirmed an inverse head and shoulder breakout above Rs 115 which had a target of around 140.
However, post its result the stock underwent a sharp correction and is currently trading near Rs 109 odd level.
The chart structure is still good for a long trade with double bottom support near 103 levels. Traders are advised to buy the stock at Rs 108 for the upside target of Rs 118 with a stop-loss of Rs 103. The time horizon is one–three weeks.
(The author is Sr. Technical Analyst, IndiaNivesh Securities Limited)
Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & InvestmentsThe views and investment tips expressed by investment experts 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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.