Moneycontrol
Last Updated : May 18, 2018 12:00 PM IST | Source: Moneycontrol.com

Podcast | Stay cautious, Nifty may head towards 10,500; 3 stocks that could return up to 10%

It is advisable to remain cautious and not venture into over-leveraged positions. Here is a list of top three stocks that could deliver returns of up to 8-10 percent.

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Hadrien Mendonca

The market turned highly volatile amid an eventful week. The political drama in Karnataka continues to unfold as uncertainty over who will form the government remains.

If that wasn’t enough, rising US bond yields and crude oil prices and spiking inflation are among the major headwinds for the markets.

A smaller timeframe chart analysis indicates that the Nifty has broken from its head and shoulder pattern. This pattern is generally seen around the tops after a strong rally.

Projections of a breakdown suggest that Nifty is likely to decline towards its potential target of 10,500 levels. The entire bearish structure is likely to get negated only if the index surpasses the 10,800 mark on a closing basis.

The Bank Nifty is also showing signs of weakness as the index is on the verge of a breakdown. A break below the 26,000 mark would confirm this breakdown which would further weaken the overall structure of the index. Immediate support for the Bank Nifty is now placed at 25,800 levels.

It is advisable to remain cautious and not venture into over-leveraged positions. Here is a list of top three stocks that could deliver returns of up to 8-10 percent.

Here is a list of top three stocks which could deliver up to 8-10% returns:

Bajaj Finance Ltd: Buy| Target: Rs 2,250| Stop loss: Rs 1,975| Returns 9%

The stock has been consolidating for the past eight months and has finally broken out from its multi-month channel pattern on the weekly chart. The breakout has also been accompanied with a smart uptick in traded volumes which is a good sign.

The 21-DEMA has proved to be a strong support area whenever stock was under pressure. We expect Bajaj Finance to make an attempt to rally towards its potential target of Rs 2,250 in the medium term.

Colgate Palmolive Ltd: BUy| Target: Rs 1,276| Stop loss: Rs 1,138| Returns 9%

The stock has broken out from the Cup and Handle pattern seen on the weekly charts and has also sustained above the same for the past two weeks indicating strength in the breakout.

Rising volumes and Relative strength index (RSI) are all indicating that the current momentum is likely to extend further.

We expect the stock to surge higher towards its potential target of Rs 1,276 levels in the medium term. Traders can put a stop loss below Rs 1,138

Oil India: Buy| Target: Rs 266| Stop loss: Rs 230| Returns 10%

The stock has been consolidating for the past 18 weeks and has finally broken out from the rising wedge pattern on the weekly charts.

The breakout has been accompanied with a smart uptick in traded volumes. The relative strength index also indicates that the current momentum is likely to extend further.

We expect the stock to surge higher towards its potential target of Rs 266 levels in the medium term which translates into a 10 percent returns.

Disclaimer: The author is Senior Technical Analyst, IIFL. 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.
First Published on May 18, 2018 08:40 am
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