Shitij Gandhi
After a muted June expiry, the Nifty is again seen trading in the 10,600-10,700 band. Derivatives data shows that at current levels there is still a lot of outstanding Nifty short positions as well as index calls, which indicates another round of short covering going forward.
The Nifty can move towards 10,800-10,820 levels this week as the market undertone remains bullish. This scenario is likely to continue as the index has multiple strong supports at 10,650 and 10,600 levels.
Currently, the index is moving higher with a decent addition in open interest (OI), which indicates strength in the current trend. Option writers were seen active in the recent rally given the put writing in 10,700 and 10,600 strikes along with call unwinding.
Among Nifty call options, the 11,000 strike has the highest OI of more than 35 lakh shares. In put options, 10,600 strike holds the maximum OI with over 50 lakh shares.
On the technical front, 10,600-10,580 spot levels have a strong support zone and the current trend is likely to continue towards 10,800-10,820 levels.
Here is a list of top 3 stocks that could return 11-15% in the short term:
Seamec Limited: Buy| Target: Rs 307| Stop Loss: Rs 249| Return 13%
The stock has been maintaining its bull run and trading high since the beginning of the year with the formation of higher highs and higher bottom pattern on the daily as well as weekly charts.
However, from the last five weeks, the consolidation in prices has held the stock to trade in the range of Rs 240-275 levels which led to the formation of rectangle pattern which is generally traded as a continuation pattern.
The positive divergence on the secondary indicators like RSI and Stochastic which are pointing towards the next up move in prices moving forward.
Traders can accumulate the stock in a range of Rs 270-275 for the target of Rs 307 and a stop loss below Rs 249.
Berger Paints (I) Limited: Buy| Target: Rs 315| Stop Loss: Rs 265| Return 11%
In the recent weeks, the stock witnessed a fresh breakout above Rs 290 levels and tested Rs 305 levels thereon amid follow up buying.
However, since then profit booking at higher levels has once again pulled the prices towards its 100-days exponential moving average on daily charts with the formation of lower highs and lower lows.
This week we have witnessed a fresh breakout in prices above the falling trend line of the sloping channel along with marginally higher volumes. Traders can accumulate the stock in a range of Rs 283-287 for the upside target of Rs 315 and a stop loss below Rs 265.
Jyothy Laboratories Limited: Buy| Target: Rs 271| Stop Loss: Rs 215| Return 15%
After giving a consolidation breakout above Rs 210 levels in the recent past, the stock is seen trading in a rising channel with the formation of higher highs and higher lows on a daily interval.
The prices are also maintaining well above its short and long-term moving averages along with consistent buying at lower levels.
Additionally, on the weekly charts, the stock has given breakout above the ascending triangle pattern which is generally considered bullish when found in an uptrend.
Traders can accumulate the stock in a range of Rs 235-240 for the upside target of Rs 271 levels with a stop loss below Rs 215.
Disclaimer: The author is Senior Research Analyst, SMC Global Securities Ltd. The views and investment tips expressed by investment experts 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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