If Nifty manages to trade above 11,000 consistently then it may induce rally towards 11,250-11,400.
The Nifty on August 7 lost almost 120 points from day’s high after Reserve Bank of India announced a rate cut of 35 bps.
After a strong rebound on August 6, the index is in a bearish zone as it is making lower lows lower highs on a consistent basis.
The index sold off in the last hour of the trading session on August 7 and failed to close above 10,900 levels. PSU banking index was a major loser in the day’s trading session which pushed Bank Nifty below 28,000 marks.
Majority of moving averages and oscillators are in the favours of bears, Hence, any bounce back is vulnerable to a sell-off at higher levels.
Going forward, a decisive break below 10,750 may drift prices below 10,450 which will act as near-term support for the Nifty.
On the higher end, 11,000 is acting as a change of polarity. If the index manages to trade above 11,000 consistently then it may induce rally towards 11,250-11,400.
Here is a list of top three stocks which could give 6-7 percent return in the next three to four weeks:
Berger Paints: Buy| LTP: Rs 347.50 | Target: Rs 370.50|Stop Loss Rs.335.50|Upside 6.60 percent
After a prolonged consolidation, recent price action has pushed the stock above its trendline resistance on the weekly interval.
The stock is sailing above all its major exponential moving averages which is a positive sign. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover.The stock is forming a higher high and higher low formation on the monthly charts. Traders can accumulate the stock in the range of Rs 345 -349 for the target of Rs 370.50, and a stop loss below Rs 335.50.
United Spirits: Buy| LTP: Rs.599.10| Target: Rs 641|Stop Loss: Rs 575|Upside 7 percent
A recent up move in the stock pushed prices above its 21 and 50-days EMA on the daily interval charts.
The stock has outperformed the benchmark index in the past four weeks. It breached its horizontal trendline resistance on daily interval on August 7.
Momentum oscillator RSI (14) is sailing above 50 levels with positive crossover. Traders can accumulate the stock in the range of Rs 597 - 602 for the target of Rs 641, and a stop loss below Rs 575.
ITC: Sell| LTP: Rs.253.35 | Target: Rs 238|Stop Loss: Rs 263.50|Downside 6 percent
On the weekly chart, ITC has witnessed a breakdown from the ‘Symmetrical Triangle Pattern’. The price broke below all major exponential moving averages on the weekly interval charts which point towards selling pressure.
Further, it has turned south after facing resistance at the 61.8 percent Fibonacci retracement level which suggests weakness.
RSI has also turned southward from the resistance zone of 60 which favours the bears. The stock may be sold in the range of Rs 255 -251 for targets of Rs 238, and keep a stop loss above Rs 263.50.
(The author is Technical Analyst, Bonanza Portfolio Ltd)Disclaimer: 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.