Going forward, the bias is expected to remain bearish. At the lower end, if Nifty sustains below 10,750, it may drift down towards 10660.
The Nifty started with a gap-down and remained in the negative territory throughout the session on December 5. On the higher end, the index found resistance at around 10,800, whereas fall was restricted to around 10,750.
A Bearish Island Reversal kind of formation was visible on the daily chart, which suggests a sudden spike in pessimism. Also, we observe that the Nifty is failing to sustain above the 50 percent retracement of its previous fall from 11,760 to 10,004.
The daily momentum indicator, RSI (14), has entered a bearish crossover, which suggests waning price momentum in the near term.
On the options front, maximum open interest position is visible in 11,000 CE (29.29 lakh) and 10,700 PE (38.92 lakh).
Going forward, the bias is expected to remain bearish. At the lower end, if Nifty remains below 10,750 it may drift down towards 10,660. A sustained trade below 10,660 may trigger a correction towards 10,580.
On the other hand, 10,850 is likely to act as crucial resistance, above which Nifty may move towards 11,000.
Here are 3 stocks that could return 5-8 percent in the next one month:
TCS: Buy| LTP: Rs. 2,006.75 | Target: Rs 2,170| Stop loss Rs 1,919| Return: 8 percent
On the daily chart, the stock has moved above the previous inflection point after making a double bottom. In addition, the price has moved above its 38.2 percent Fibonacci retracement level of the previous fall from Rs 2,275 to Rs 1,784.
The daily momentum indicator is in a bullish crossover with a current reading of 59.99. Traders can accumulate the stock in the range of Rs 2,000–2,010 for the target of Rs 2,170 with a stop loss below Rs 1,919.
Dr Reddy's Laboratories: Sell| LTP: Rs 2,671.65 | Target: Rs 2,520 | Stop loss: Rs 2,746| Return: 5.6 percent
On the daily chart, a dark cloud cover is visible which will remain valid as long as the price does not move above the recent high of Rs 2,742.60.
Also, a negative divergence is visible on the daily RSI which suggests a possible bearish shift in the price momentum. Traders can sell the stock in the range of Rs 2,665-2,680 for the target of Rs 2,520 with a stop loss above Rs 2,746.
Grasim Industries: Sell| LTP: Rs 826| Target: Rs 760| Stop loss: Rs 862| Return: 8 percent
The stock has changed its direction of the movement by breaching the upward sloping trendline on the daily chart. In addition, the stock has failed to move above 50-EMA in its recent price action.
Also, a double top formation is seen on the daily chart of the stock. Traders can accumulate the stock in the range of Rs 820-830 for the target of Rs 760 with a stop loss below Rs 862.
The author is a Technical Research Analyst at 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.