Rohan Patil
The Nifty on July 31 rebounded almost 100 points from the day’s low and closed with a marginal gain of 32 points. The Nifty bounced back towards its psychological level of 11,000 levels.
Following the brutal sell-off that Nifty witnessed from July 05, the 50 pack index found support near 11,000 mark which is supported by a Fibonacci ratio.
The market will remain vulnerable to sell-off at a higher level. Given the current technical setup, the market is well settled below its 50-DMA on weekly intervals.
The medium-term trend is still negative as the benchmark index is trading in a lower high. And lower low formation on the daily chart.
Now, a decisive break below 11,000 may drift prices below 10,800 which will act as near term support for the Nifty.
On the higher end, 11,300 will act as a crucial resistance. Going forward, sustained trades above 11,300 may further fuel the rally towards 11,450.
Here is a list of top three stocks which could give 6-7 percent return in the next three to four weeks:
Coal India: Buy| CMP: Rs 204.45 | Target: Rs 218 | Stop Loss: Rs 195 | Upside 6.62 percent
The stock price made a new low but it is still not confirmed by Momentum Oscillator RSI (14) on the weekly scale, which calls for a bullish divergence on cards.
RSI on the daily interval has rebounded from 15 levels which is an extremely oversold condition. Also, Coal India has formed a 'Bullish Nenstar Harmonic Pattern' on a daily interval.
In terms of the candlestick, the stock formed a 'Bullish Piercing Pattern' on the daily chart, which will act as a support in the near term.
Traders can accumulate the stock in the range of Rs 203.50 -205.50 for the target of Rs 218, and a stop loss below Rs 195.
Britannia Industries: Sell| LTP: Rs 2,605| Target: Rs 2,450 | Stop Loss Rs 2,685 | Downside 6 percent
After a prolonged consolidation, Britannia Industries has breached its horizontal trendline support, which earlier acted as a support in a previous couple of occasions.
The stock has recently shifted below its 100-days (EMA) on the weekly interval charts. The momentum Oscillator RSI (14) has rebounded on the lower side after facing resistance at 50 levels in a previous couple of occasions on the daily time frame.
Traders can sell the stocks on rallies in a range of Rs 2,600-2,610 for the target of Rs 2450, and a stop loss above Rs 2,685.
Cholamandalam Investment: Buy | CMP: Rs 259.65 | Target: Rs 278 | Stop Loss: Rs 249 | Upside 7.1 percent
After a decent correction, prices seem to have rebounded from its 200-DMA on the weekly interval. It formed a 'Bullish Engulfing Candlestick Pattern' on the daily time frame which comes from the bullish reversal family.
Momentum Oscillator RSI (14) has rebounded from an oversold zone with positive crossover on the daily chart. July 31st' candle has engulfed the previous three days candles, which adds positive breath in the current momentum.
Traders can accumulate the stock in the range of Rs 258-261 for the target of Rs 278, and a stop loss below Rs 249.
(The author is Technical Analyst, Bonanza Portfolio Ltd)
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