Podcast | Stock picks of the day: Investors should adopt a ‘sell on rise’ strategy while trading Nifty

Mehul Kothari

In the past, we believed that the Nifty50 was likely to remain in the range of 10,740–11,100, and a move on either side would dictate the trend in the near term.

In line with the forecast, the index took a U-turn from 11,084 on September 13. And, from there, we witnessed relentless selling in the index which pushed Nifty below the support placed at 10,740.

Technically, we are witnessing a breakdown on the daily chart, which resembles a "symmetrical triangle" formation. The theoretical target for the same is around 10,500.

Thus, for the time being, we have a "sell on rise" view for the markets. And, the pattern would be negated if the index closes above 10,885 levels.

Hence, till that time, traders are advised to avoid aggressive long bets. Going ahead, there is a fair chance of markets attracting buying interest near the aforementioned mark 10,500 because in the past the zone of 10,800–10,500 was a demand zone for the Nifty.

The index oscillated in this range from December 2018 to March 2019 before starting a fresh rally towards an all-time high. Thus, we are hopeful of history repeating itself and the pessimism to cool down after this fall.

Here is a list of top three stocks which could give 5-17 percent return in the next one-three weeks:

Apollo Tyres: Sell| LTP: Rs 175 | Target: Rs 168 | Stop Loss: Rs.183 | Downside 4 percent

Since August 2018, the stock has been trading in a strong downtrend and is constantly making lower highs and lower lows in the market.

Recently, it underwent a pullback from the lows of Rs 150 which got arrested near Rs 180 mark. The area of Rs 180 was also the previous support which has now turned into strong resistance.

This level also coincides with the placement of falling trend line on the larger degree charts which has been a tough hurdle to cross.

At this juncture, the reward-to-risk ratio looks highly lucrative to go short. Hence, traders are advised to create shorts in the stock near Rs 178 for the downside target of Rs 168, and a stop loss of Rs 183.
Bata India: Sell | LTP: Rs 1,530 | Target: Rs 1,450 | Stop Loss: Rs 1,580 | Downside 5 percent

Bata India surged more than 25 percent from the low of Rs 1,250 in the last couple of months without any meaningful correction and has now entered in an overbought terrain.

The daily charts have already started showing signs of exhaustion. Even the larger degree charts are highly overbought which indicates a possibility of profit booking soon.

On the monthly chart, there is a negative divergence on RSI indicator and this adds more conviction to our sell view.

Traders are advised to sell the stock near Rs 1,540 for the downside target of Rs 1450 with a stop loss of Rs 1,580.

Page Industries: Buy | LTP: Rs 19,576 | Target: Rs 23,000 | Stop Loss: Rs 17,500 | Upside 17 percent

In the year 2017, Page Industries underwent a range breakout above Rs 17,500 mark which resulted in a rally towards Rs 36,000. Now, the stock recently revisited the breakout zone by correcting more than 50 percent from the top.

Basically this is a demand zone for the stock and we have been witnessing some buying interest in the stock lately.

The stock has managed to sustain above its 200-weeks simple moving average (SMA) which is a sign of strength.

On the monthly chart, we are witnessing a bullish "Hammer" formation which indicates that the bottom is in place and the stock could be accumulated on dips.

Traders are advised to buy the stock between Rs 19,500 – 19,000 for the upside target of Rs 23,o00 and a stop loss of Rs 17,500.

(The author is Sr. Technical Analyst, IndiaNivesh Securities Limited)

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.