The Nifty advanced in the past three sessions to hit the 11,700 level but failed to hold on to the same on July 18, as traders turned indecisive at higher levels.
The index formed a ‘Spinning Top’ kind of candle on the daily chart which was followed by a large bearish candle on July 18. In addition, the current advance-decline ratio remains a concern.
If Nifty fails to regain 11,720 in the coming week, it may trigger further selling pressure. Important support for Nifty50 is seen around the 11,500 zone.
Bank Nifty, on the other hand, is currently in the process of forming a 'Head and Shoulder' pattern. The neckline for the same is around the 30,200 zone which may also act as a crucial support area. A crack below the same could lead to a fresh breakdown.
Here is a list of top three stocks which could give 5-10 percent return in the next three to four weeks:
Sun Pharma Advanced: Buy| Target: Rs 169| Stop Loss: Rs 147| Upside 10 percent
The stock is in a solid uptrend. In the past three weeks, it has broken out from a Flag pattern on the daily chart. This indicates a continuation of the current rising momentum.
The stock has also surpassed its 50-DMA. We expect the stock to extend the momentum. Traders can hold on to long positions with a mentioned stop loss on a weekly closing basis.
Colgate Palmolive India Ltd: Buy| Target: Rs 1,288| Stop Loss: Rs 1,163| Upside 7 percent
The stock has been consolidating for the past seven weeks and has finally broken out from a rising channel pattern on the daily chart.
Colpal has also surpassed its long-term 200-DMA and has also managed to close above the same. The breakout has also been accompanied with the smart uptick in traded volumes. We expect the current momentum to get extended further.
Glenmark Pharma July Futs: Sell| Target: Rs 416| Stop Loss: Rs 449| Downside 5 percent
The stock has been forming a lower top and lower bottom structure. The stock has resumed its downtrend and has finally broken down from a rising channel pattern on the daily chart.
Traders can hold on to short positions with the mentioned stop loss on a weekly closing basis.
(The author is a Senior Technical Analyst, IIFL)
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