Nandish Shah
Indian markets have risen for eight sessions on the trot to close above 10,500 levels, first time after February 27, 2018. These have been small moves. This slow movement up will not force the bears to cover their shorts like the toad in gradually warming water and is likely to boil them alive.
From the bottom of 9,951, Nifty has recovered more than 550 points, to close at 10,528 level on Monday. During the last week, Nifty has also surpassed the big hurdle of its 50-DMA and 100-DMA, placed at 10,400 and 10,450 respectively.
The Nifty has also surpassed crucial resistance of its previous top on the daily chart which was placed at 10,478. Moving averages setup has turned bullish for the medium term, as Nifty has moved above 20, 50,100 and 200-DMA.
The next resistance for the Nifty comes at 10,561 and 10,705, which happens to be a 50 percent and 61.8 percent Retracement of the entire downswing which nifty witnessed from 11,171 to 9,951. As far as support is concerned, 10,400 is a key level to watch out for.
In the derivatives, we have seen long positions being built in the Nifty and Bank Nifty Futures’. Moreover FIIs’ also created long positions in the Index Futures’ and Stock Futures’ segments during the last week
Put call ratio also rose sharply to 1.67 level from 1.45 levels during last few days on the back of aggressive Put writing at 10,400-10,500 levels, Indicating that on the lower side Nifty would find strong support in the vicinity of 10,400-10,500 level. On the higher side Calls have been written at 10,700 levels.
Considering the evidence discussed above, our advice would be to accumulate long positions in the Nifty with the stop loss of 10,400 with Target of 10,700.
Here is a list of top three stocks which can give up to 11% return in the short term:
Tata Global Beverages Ltd: BUY| Target Rs300 | Stop-loss Rs 268 | Return 7%
Tata Global reversed northwards after forming a Double Bottoms around 250 levels to close at two months high on Monday. The stock price has also given a bullish breakout by closing above the downward sloping trendline, adjoining the highs of 15-January-2018 and 09-April-2018.
The stock price is trading above its 20, 50, 100 and 200-SMA, which indicates a bullish setup for the medium to long-term charts. The momentum indicators and oscillators are also showing strength in the stock.
FMCG as a sector is doing well. Therefore, we recommend buying Tata Global at CMP of Rs 280 for the upside target of 300 and keep a stop loss below 268.
Jai Corp Ltd: BUY| Target Rs. 181 | Stop-loss Rs 154| Return 11%
Jai Corp has given bullish trendline breakout on the daily chart with higher volumes by closing above the downward sloping trendline, adjoining the highs of 11-January-2018 and 09-April-2018.
In the month of March, after taking support near 200-DMA, Jai Corp reversed northwards to close above its 5 and 20-DMA with higher Volumes.
The momentum indicators and Oscillators like RSI, MACD, and KST are showing strength in the Stock for the short to medium term. Therefore, we recommend buying JAI CORP for the upside target of 181 and keep a stop loss below 154.
Genus Power Infrastructure Ltd: BUY| Target Rs. 62 | Stop-loss Rs 54 | Return 8%
After forming double bottom around 49 odd levels, Genus Power reversed its trend to close at one month high today with higher volumes. Few oscillators like RSI and KST have formed positive divergence during the month of March.
This means price levels were making lower bottoms and oscillators were making higher bottoms, indicating that dominance of bears was gradually going down.
The stock price is currently trading above its 5 and 20-DMA indicating bullish trend for the short term. Therefore, we recommend buying Genus Power for the upside target of 62 and keep a stop loss below Rs54.
Disclaimer: The author is Technical & Derivatives Analyst at HDFC Securities. 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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