Abhishek Mondal
Bears made a strong come back this week on Dalal Street with Nifty50 ending the Tuesday’s session with a cut of around one and a half percent. The index breached its crucial 11,300 mark.
Investor sentiment was largely battered by subdued global cues and sharp fall in Indian rupee. The markets started the session on the pessimistic note and Nifty 50 continued its fall below 20-day moving average and closed at 11,287.50 down by 1.32 percent.
It formed a strong Bearish candle on the daily scale. A negative sequence of lower tops and lower bottoms in Nifty as per hourly scale suggests that the short-term trend has turned in favor of the bears.
On the daily charts, the index is trading near its immediate support level of 11,274 (50-DMA). Any violation of this level will trigger further downside towards 11,170 and 11,075 levels.
On the upside, the 11,400 and 11,480 levels will remain a key resistance. The Relative Strength Index (RSI) on the daily chart is 40, showing negative momentum and the MACD is trading above zero line but with the negative cross of its signal line, which indicates that price may come down further in upcoming trading sessions.
The volatility index ended up by 0.84 percent at 15.33. An increase in VIX suggests limited upside and a consolidated down move in the market.
On the Options front, maximum Call open interest (OI) of 46.87 lakh contracts is seen at strike price 11,800, followed by 11,600 which now holds 43.08 lakh contracts and maximum Put open interest of 42.94 lakh contracts is seen at strike price 11,400, followed by 11,000 which now holds 39.64 lakh contracts.
As per the options data, the support and resistance levels for Nifty is shifted lower compared to last week and the immediate support is seen around 11,400 and 11,000 levels whereas 11,600 and 11,800 will act as a strong hurdle in September expiry.
Here is a list of top three stocks which could give 7-25% return in the next 1 month:
Natco Pharma: BUY | Close: 829.75 | Target: Rs 900 | Stop loss: Rs 795 | Return: 8.47%
After making long consolidation, the stock has given a breakout above Rs 824-825 levels on Tuesday with a strong price momentum along with higher volumes.
The daily Relative Strength Index (RSI) is trading at overbought zone but still showing positive momentum and MACD is trading around zero line with positive crossover whereas (+) DI trading above (-) DI, which indicates that the stock has the potential to move higher.
Based on observations, traders can buy the stock in the range of Rs 825-830 with a stop loss below Rs 795 (closing) for the target of Rs 900.
Chennai Petro: Sell | Close: 281.60 | Target: Rs 264 & 255| Stop loss: Rs 301 | Return: 7.37%
On the daily scale, the stock has given a breakdown from symmetrical triangle pattern around 289-290 levels on Tuesday with higher volumes, which suggest a bearish run for the stock price in coming sessions.
The daily Relative strength index (RSI) is showing negative momentum and MACD is trading around zero line with negative cross whereas (-) DI continuously trading above (+) DI.
Based on the above observations, traders can sell the stock after some technical bounce back around Rs 285-288 with a stop loss above Rs 301 (closing) for a target of Rs 264 & 255
Automotive Axles: Buy | Close: 1,432.60 | Target: Rs 1,800 & 2,050 | Stop loss: Rs 1,235 | Return: 25.65%
On the weekly scale, the stock has given a close above its 38.2 percent retracement levels of (28th January to 3rd June 2018 down move) and trying to make a rounding bottom formation with moderate volumes which suggest a bullish run and we may see a gradual upward movement in the stock price.
The momentum indicators are in bullish mode on the weekly scale whereas (+) DI trading above (-) DI, signaling strength in the stock. Positional traders can buy the stock in the range of Rs 1,425-1,435 with a stop loss below Rs 1,235 (closing) for a target of Rs 1,800 & 2,050.
Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on Moneycontrol are his own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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