Vinay Rajani
From a bottom of 9,951 registered on March 23, the Nifty has risen about 808 points, or 8.08 percent, to close at 10,740. After touching 10,705 on Friday’s session, the Nifty has completed its 61.8% Fibonacci retracement of the entire downswing seen from 11,171 to 9,951.
Completion of the 61.8% retracement negates the bearish implication of the bear phase that the Nifty witnessed from 11,171 to 9,951. The Nifty is currently trading above its 20, 50, 100 and 200 daily moving average, which indicates that the short- to medium-term uptrend is still intact.
By closing above 10,736, the Nifty has covered the gap that was formed between 10,702 and 10,736 on February 5. The next resistance for the Nifty is seen at 10,883 which happens to be its 76.4% Fibonacci retracement of the entire downswing seen from 11,171 to 9,951. Support for the same can be seen at 10,638 and 10,560.
Bank Nifty
The Bank Nifty managed to form a higher top and higher bottom formation on the daily chart. The index has been able to surpass its previous top of 25,426 and 100-DMA resistance of 25,400 on the closing basis. The index has broken out from its bullish inverse head and shoulder pattern on the daily charts, which projects an upside target around 27,400 in the short- to medium-term. Supports for the index can be seen at 24,700 levels.
FII derivate trades
On the derivative front, long build-up is seen in Nifty and Bank Nifty futures. Nifty open interest put call ratio has risen to 1.53 levels. Foreign institutional investors (FIIs) built up long positions in the index and stock futures segment on the first day of the May series. They net bought index futures worth Rs 669 crore and stock futures worth Rs 1,109 crore.
To conclude, we advise remaining long on the Nifty with an upside target of 10,883, keeping a strict stop loss at 10,630 levels on a closing basis.
Here is a list of top three stocks which could give up to 15% return in the short term:
Marico: Buy| Target: Rs 365 | Stop loss: Rs 312 | Return 10%
The stock rose more than 3.5 percent with a significant jump in volumes during Monday’s session. The S&P BSE FMCG index has been performing very well for the last 4 weeks.
Marico is trading near to its all-time and 52-week high of Rs348.70. It is also trading well above all the important moving average parameters, indicating that the short to medium term need remains bullish. The stock price has recently taken support on its 100-DMA, placed at 314 and resumed the uptrend.
Higher tops and higher bottoms on the weekly and monthly charts are well intact. Oscillators like MACD and DMI are indicating strength in the existing trend. We recommend traders to buy Marico for the upside target of Rs365, keeping a stop loss below at Rs312.
IRB Infrastructure Developers Ltd: Buy| Target: Rs 325 | Stop loss: Rs 250 | Return 15%
The stock has risen more than 26 percent in the April with a significant jump in volumes. The stock price has given highest monthly close since July 2010, which is a huge development technically.
The stock has given a breakout from the long consolidation, held for the last 16 quarters, resulting in a breakout on the long-term charts.
Selected infrastructure stocks have been doing well for the last two-three months and IRB has now started participating from that segment.
Oscillators have been showing significant strength on the weekly and monthly charts. We recommend buying IRB for the upside target of Rs325, keeping a stop loss below at Rs250
Crompton Consumers: Buy| Target: Rs 260 | Stop loss: Rs 217 | Return 10%
The stock has been consolidating between Rs220 and Rs245 for the last two months. The stock price has formed multiple bottoms around Rs220 levels.
The stock has witnessed a healthy correction of 26 percent from January 2018 highs which resulted in the formation of a “Doji” candlestick pattern on the monthly charts for the last two months, indicating a good probability of bullish trend reversal from current levels.
Consumer electric stocks remained in traction in the recent past and Crompton is also likely to catch up with that uptrend. Technical evidence indicates that the stock is getting accumulated on dips and is now all set to appreciate from here with the rise in momentum.
We recommend traders to buy Crompton Consumers for the upside target of 260, and keep a stop loss below Rs217.
Disclaimer: The author is Technical Analyst, PCG Desk, 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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