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Last Updated : Dec 17, 2018 08:09 AM IST | Source: Moneycontrol.com

Podcast | Stock picks of the day: Book profit in longs at around 10,900-11,000

After two highly volatile weeks, domestic indices are expected to trade between 10,950-10,600 this week and to continue consolidating with no major directional move

Moneycontrol Contributor @moneycontrolcom
 
 
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Aditya Agarwal

Indian bourses opened on a negative note this past week on the back of subdued global cues, and thereafter remained volatile in the first two trading sessions.

It can be argued that the surprise resignation of RBI Governor Urjit Patel and the results of assembly elections in five states had a bearing on the market's performance in the week gone by.

Close

Amid such high volatility, the Nifty corrected by more than 300 points and touched a low of 10,333 in Tuesday's trade.

However, from there, a sharp short covering-led pullback was seen across the board, helping the index recover all its losses. It finally closed above 10,800 with gains of almost 1 percent for the week.

The Nifty is currently trading near its crucial resistance zone and on the higher side, call writing at 10,900-11,000 strike prices is likely to act as a stiff supply zone for indices in the near term.

On the lower side, put writing is seen at the 10,500 strike price, which will act as a strong support for the index.

After two highly volatile weeks, domestic indices are expected to trade between  10,950-10,600 this week and to continue consolidating with no major directional move.

Any move towards 10,900-11,000 can be used to book profit in trading long positions whereas a pullback towards 10,600-10,550 can be utilised to initiate fresh longs.

Bank Nifty has stiff resistance at around 27,200 and profit booking is expected around that level. However, if the index breaches 27,200 and sustains above that, then another round of short covering can propel it towards 27,600-27,800 in the near term, whereas on the lower side, 26,400 will act as a strong support.

Here are 3 stocks that can return 8-12 percent in the next one month:

Dabur: Buy around 435-430 | Target: Rs 480 | Stop Loss: Rs 410 | Return 8.6 percent

After registering a high of 500, Dabur saw sharp correction and on the lower side, it tested 360 levels in the month of November. On the daily/weekly charts, the stock had strong support around the Rs 360 zone.

It respected the support placed at Rs 360 levels, and has seen a good pullback from there in the last few weeks. On the daily chart, inverse head and shoulder pattern is quite visible on the counter and it gave a breakout from the said pattern above Rs 430 levels.

In the short-term perspective, the outlook for Dabur remains bullish and any dip towards Rs 435-430 can be utilized to initiate long positions with a target of Rs 480 and a stop loss placed below Rs 410.

Indian Bank: Buy around 240 | Target: Rs 265 | Stop Loss: Rs 228 | Return 10 percent

The counter is moving in line with all the other PSU Banking stocks. Indian Bank saw a correction from higher levels and in that process made a low of Rs 210 levels. Since the last 3 months, the stock has consolidated at 210-265 levels.

On the larger degree framework, the 200-210 zone is a strong support for the stock. It retested its low of Rs 210 just last week, and witnessed a sharp pullback from there and managed to close above its short-term resistance of 230 levels.

On the back of short covering, we expect Indian Bank to see further upside from the current levels and can test the upper side of the range. Therefore, traders can buy the stocks around 240 levels with a target of 265 and a stop loss placed below 228.

Ashok Leyland: Sell around 104-105 | Target: Rs 96/92 | Stop Loss: Rs 109 | Return 11 percent

Ashok Leyland is in a corrective mode since September and is making lower highs and lower lows on the daily chart. On the larger degree charts, the stock has given a breakdown below its crucial support zone of 107 and for the last 2 weeks, it is trading below that.

In the futures segment, the stock is witnessing a short formation at higher levels and any pullback in the counter is being used to initiate fresh shorts.

Our short-term outlook on the counter remains weak and we recommend selling Ashok Leyland around 104-105 with a price target of 96/92 and a stop loss placed above 109.

Disclaimer: The author is Head of Technical Research, Way2Wealth Brokers Pvt. Ltd. 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.

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First Published on Dec 17, 2018 08:09 am
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