Aditya Agarwal
After a series of a sideways moves, the Nifty resumed its uptrend last Friday by breaching the resistance level of 10,640. This triggered fresh buying interest which pushed the index towards 10,800 levels.
In that optimism, it eventually filled the gap (10,702.75-10,736.10) of February 5. The last two trading sessions saw a bout of profit booking at higher levels and the Nifty re-tested its previous resistance zone of 10,640 on Thursday which also coincided with last Friday’s gap area.
Nifty’s weekly relative strength index (RSI) (14) is hovering near its crucial level of 60. At present, 10,640 will act as immediate support and any break below this level will temporarily halt the current optimism. In that case, the Nifty is likely to correct towards 10,540–10,490 levels.
On the higher side, the recent swing high of 10,785 will act as an immediate hurdle above which the index is likely to rally towards 10,860 levels.
For the next few trading sessions, we expect the index to hover in a broad 300 point range (10,500-10,800). State election in Karnataka scheduled for next week will keep indices volatile and any unfavourable result may trigger a selloff, which could drag the Nifty towards 10,300 levels.
Here are the lists of top three stocks which could offer up to 12% return in the short-term:
ITC: Buy around Rs 283 - 280| Target: Rs 320| Stop loss: Rs 266| Timeframe 15 to 21 sessions| Return 12%
Looking at the weekly chart, the stock is in a consolidation phase since the past few months which resulted into a formation of Double Bottom pattern on the charts.
Recently, ITC saw a decent traction and in that optimism, the stock confirmed its breakout from the Double bottom pattern on daily chart on a closing basis.
On the weekly chart, the said pattern will be confirmed once it starts sustaining above Rs 291. The weekly RSI (14) entered inside the 60 levels which indicate that the stock is on the verge of a breakout.
The weekly Bollinger band has started expanding and is indicating that the volatility is likely to increase in the coming weeks. Hence, we recommend traders to buy this around Rs 283 to Rs 280 with a price target of Rs 320 and a stop loss placed below Rs 266.
Voltas: Sell around Rs 625-630| Target: Rs 570| Stop loss: Rs 665| Time frame 15 to 21 trading sessions| Return 7%
Looking at the weekly chart, the stock failed to surpass its previous all-time high of 675.30 and slipped into a consolidation. As a result, weekly chart resembles series of a narrow range candle which indicates indecisions.
The weekly RSI (14) is struggling to cross 60 levels which indicates a shift in a range. In Thursday’s trade, the stock broke the crucial pivot support which indicates weakness in the counter.
Hence, we advocate traders to build a short position around Rs 625-630 levels with a price target of Rs 570. A stop loss should be placed at Rs 665 on a closing basis.
Jindal Steel: Sell around Rs 245 - 250| Target: Rs 218| Stop loss: Rs 264| Time frame 15 to 21 trading session| Return 9%
Looking at the daily line chart, the stock found resistance near 61.8% retracement of its entire swing move and turned sharply. The daily RSI (14) too resist near 60 levels and turned lower which is a sign of a range shift.
Recently, the stock broke the upward sloping trend line drawn from the bottom of its 205. Considering the above technical evidence, we expect this stock to correct sharply; hence, we recommend traders to sell this stock in a range of Rs 245 – 250 with a price target of 218. A stop loss should be placed above Rs 264.
Disclaimer: The author Head Technical Research, Way2Wealth Brokers Pvt. Ltd. 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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