The markets extended losing streak to the sixth consecutive trading session on July 25 as there seems to be no respite on the Street.
Selling pressure across the board dragged the Nifty to shut below the 11,300 zones. Currently, indications point towards the fact that the market is in an oversold zone.
Our weekly chart analysis indicates that Nifty is precariously poised around the support of rising weekly trendline. If the index manages to hold above the trendline then a meaningful recovery is likely.
Going forward, the long-term 200-DMA levels of 11,130 is going to act as a crucial support area for the Nifty. On the upside, resistance is seen around the 11,400 zone.
Bank Nifty too seems to be oversold at the current juncture and a dead cat bounce cannot be ruled out. Crucial support is seen around the 28,900 zone while resistance is seen around the 29,600 levels in the near term.
Here is a list of top three stocks which could give 6-8 percent return in August series:
Power Grid: Buy| Target: Rs228| Stop Loss: Rs 205.5| Upside 7 percent
The stock has shown immense resilience and has been trading in a range for the past three weeks. Power Grid has broken out from a consolidation base on the daily chart and the breakout has been accompanied with a smart uptick in traded volumes.
Positive crossover on the moving averages further accentuates our bullish stance on the stock. Investors can hold on to their long positions with a mentioned stop loss on a weekly closing basis.
Sun Pharma Advanced: Buy| Target: Rs 176| Stop Loss: Rs 157| Upside 8 percent
The stock has been in a solid uptrend for the past three weeks and has held on to its recent higher top higher bottom structure.
The stock has also held on to its 100-DMA and also closed above the same on Thursday. We expect the upswing to extend further. Traders can hold on to long positions with stop-loss mentioned on weekly closing basis.
HPCL Aug Futs| Sell| Target: Rs 252| Stop Loss: Rs 276| Downside 6 percent
The stock has been consolidating for the past two weeks and has finally broken down from an inverse flag pattern on the weekly chart.
The stock has also cracked below its 100-DMA and also closed above the same. Traders can hold on to their short positions with a stop loss on a weekly closing basis.
(The author is Senior Technical Analyst at IIFL)
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