Dinesh Rohira of 5nance.com expects the Nifty to continue to trade rangebound between 10,910 on the upside and 10,680 levels on the downside.
After taking a marginal breather last week, the Indian equity market managed to reverse the trend on a weekly basis to close positive. The Nifty continued to trade in a tight range in the week gone by. It failed to vindicate the upward trend despite managing to trade above 10,800 levels.
The index saw a marginal setback in Thursday’s session as bears took control and pushed the index below 10,750 levels. However, it managed to recoup the downside towards closing week and touched 10,816 levels on an intraday basis.
Despite failing to hold higher levels, it managed to close the week on a positive note at 10,772.65 levels, up about 0.54 percent led by automobile companies.
On Thursday, the index formed a small bearish kind of pattern on the daily price chart indicating indecisiveness. However, it failed to offer a clear trend in the consecutive session, with profit booking at higher levels. On Friday, it formed a Shooting-Star kind of pattern on the daily chart. On the weekly chart, it formed a hammer like pattern with a low at 10,611.
The weekly relative strength index (RSI) inched higher, although no major divergence in price was seen at 58 levels. The weekly moving average convergence divergence (MACD), placed at 124, continued to trade above the signal line.
As the market enters the Q1 FY19 earnings season, and given the positive domestic developments of a minimum support price hike and good progress on the monsoon, the Nifty is likely to maintain a positive bias near its second upper band.
However, the rollout of global trade tariff between the US and China will dent market sentiment, giving traders an opportunity to create fresh positions.
We advise investors to remain extremely selective on specific sectors and stocks and maintain a trailing stop-loss on every upward movement. We expect the Nifty to continue to trade rangebound between 10,910 on the upside and 10,680 levels on the downside.
Here is a list of 3 stocks that could offer 5-13 percent in the next 1 month:
Indo Count Industries Ltd: Buy| Target: Rs. 82 | Stop-loss: Rs. 65 | Return 13%
Indo Count Industries traded in a positive trajectory on its weekly price chart post its correction from the higher band of Rs134-99 levels towards 52-week low levels. It took a strong support at 60 odd levels to reverse the trend.
The scrip made a critical breakout from its 20-days EMA at 68 levels supported by strong volume trend on weekly basis, indicating a buying trajectory.
On the weekly price chart, the scrip registered a long bullish candlestick pattern indicating a sustainable rally post breaching crucial levels on the upside.
Further, the weekly RSI placed at 55 signaled a buying regime at a current level along with positive cues from MACD suggesting an upward shift.
The scrip is currently holding a long resistance at 98 and support level at 60. We have a buy recommendation for Indo Count Industries which is currently trading at Rs 72.55.
Berger Paints India Ltd: Buy | Target: Rs. 314 | Stop-loss: Rs. 278 | Return 6%
Berger Paints maintained an upward trajectory on the weekly basis despite trading in a sideways direction on its long-term price chart and continued to hold a crucial support from 260-244 levels.
After the recent consolidation phase from Rs293 levels towards higher-low of Rs274 levels, the scrip made a reversal trend on the weekly price to breach upward from its critical resistance.
The positive breakout on the weekly basis aided the scrip to form a bullish candlestick pattern indicating a positive sentiment at the current level.
The weekly RSI trend registered an upward momentum placed at 63 suggesting a buying regime along with MACD trading on a bullish momentum.
The scrip has a support placed at Rs270 levels and resistance at Rs325. We have a buy recommendation for Berger Paints which is currently trading at Rs. 296.55
Avanti Feeds Ltd: Sell | Target: Rs. 452 | Stop-loss: Rs. 495 | Return 5%
Avanti Feeds witnessed a sharp correction on the weekly price chart despite its attempt to reverse the trend but failed to vindicate the momentum during a consecutive session to slip from 100-days EMA levels placed at 554.
Further, it witnessed a weak volume support on the weekly basis indicating a sustained pressure on short-term basis. The scrip formed a solid bearish candlestick pattern on its weekly price chart after breaching below important level indicating a sustained pressure.
Further, the secondary momentum trend continued to indicate negative signal with RSI slipping below at 32 coupled with the bearish outlook from MACD trend.
The scrip is facing a resistance at Rs542 levels and crucial support from 200-days EMA at Rs407 levels. We have a sell recommendation for Avanti Feeds which is currently trading at Rs. 475.40Disclaimer: The author is Founder & CEO, 5nance.com. 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.