It was 'bull's day out' on July 11 as Nifty staged a smart comeback amid all-round buying momentum in scrips across sectors. The Nifty found support around its 100-DMA of 11,450 and then bounced back.
The index also created higher lows for the third consecutive day, which is another positive development. Going forward, we expect the current market momentum to carry forward, which could lift the Nifty towards the 117,00-11,720 zone, also its 50-DMA resistance.
The Bank Nifty found support around its 50-DMA, which stood at 30,600. The index has managed to hold above the rising trendline support zone of 30,400, which indicates that the higher top-higher bottom structure continues to remain intact.
Going forward, the Bank Nifty has the potential of moving higher towards 31,000-31,200 in the near term. Support is seen around the 30,400 mark.
The Nifty Auto index has also shown signs of recovery and has created a hammer kind of candle on the daily chart. This indicates a near-term revival in auto stocks.
Here is a list of top three stocks that could return 5-8% in the next 3-4 weeks:
Shree Cements: Buy| Target: Rs 22,936| Stop Loss: Rs 20,836|Upside 7%
The stock is in a solid uptrend and after being under pressure in the past two weeks, Shree Cement has broken out from a falling channel pattern on the daily chart.
The stock has also found support around its 50-DMA and bounced back meaningfully. We expect the stock to resume its upswing once again. Traders can hold long positions in the stock with the mentioned stop loss on a weekly closing basis.
HDFC Life: Buy| Target: Rs 490| Stop Loss: Rs 455.5| Upside 5%
Snapping its 4-day losing streak, HDFC Life staged a smart comeback. It is holding well above its previous low which indicates extension of the higher top higher bottom structure.
HDFC Life has resumed its upswing with a smart uptick in traded volumes. In addition, a three-day consolidation base breakout indicates that the current momentum is likely to get extended further.
Torrent Power: Buy| Target: Rs 330| Stop Loss: Rs 292.5| Upside 8%
The stock has been consolidating for the past week and has finally broken out from the Flag pattern on the daily chart.
The up-thrust has been accompanied by a smart uptick in traded volumes. In addition, RSI above 70 mark indicates the current momentum is likely to get extended further.
Traders can hold on to their long positions on the stock with the mentioned stop loss on a weekly closing basis.
(The author is Senior Technical Analyst at IIFL)
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