Rohan Patil
The benchmark index, Nifty50 breached its previous four-day consolidation pattern on the downside on August 21 to close below 11,000 levels. On the daily time frame, the index witnessed a breakdown from the bearish flag pole pattern which can further sink prices towards its next immediate support which is placed at 10,600 levels.
Previous three days’ candle formation suggests that the immediate pullback got capped at 11,200 levels, and the index has now opened gate for further downside.
The NSE-NIFTY reversed before visiting its short-term moving average placed at the 20-day EMA the daily interval.
On the Options front, maximum Put open interest is placed at 10,850 followed by 10,500 strikes while the maximum Call open interest is seen at 11,000 followed by 11,500 strikes.
The next immediate support for Nifty50 is placed at around 10,750 and then towards 10,600 levels, while resistance is observed at 11,110 and then towards 11,200 levels.
Here is a list of top three stocks which could give 6-7 percent return in the next three-four weeks:
NIIT Tech: Buy| LTP: Rs 1,365.45 | Target: Rs 1,460|Stop Loss: Rs 1,310|Upside 7 percent
After a prolonged consolidation, the recent price action has pushed the prices above its horizontal trendline resistance. This week, the stock gave a fresh breakout above the key resistance levels of Rs 1,350 along with marginally higher volumes which suggest that upside is likely to continue in the coming sessions.
Continuous outperformance against the benchmark index can be witnessed in prices in the near future as well. Prices are sailing above all its major exponential moving averages.
The overall IT index has outperformed the benchmark index since the past couple of months. Traders can accumulate the stock in the range of Rs 1,360 – 1,370 for the target of Rs 1,460, and a stop loss below Rs 1,310.
Nestle India: Buy| LTP: Rs.12,594.10| Target: Rs 13,350|Stop Loss: Rs 12,210| Upside 6 percent
Nestle India is trading in higher-high higher-low formation the on weekly interval chart. The recent price action has given a breakout above the Ascending triangle pattern on the weekly chart, which will act as a continuation of the current trend.
A price pattern breakout supported with an above-average volume on the weekly interval is a positive sign. The momentum oscillator RSI (14) is hovering between a 60 – 70 ranges which hint for a continuation of ongoing momentum.
Traders can accumulate the stock in the range of Rs 12,570 – 12,620 for the target of Rs 13,340, and a stop loss below Rs 12,210.
IndusInd Bank: Sell| LTP: Rs. 1,367.20 | Target: Rs 1,285|Stop Loss: Rs 1,415|Downside 6 percent
On the weekly chart, IndusInd Bank has broken down from trendline support placed at Rs 1,450. Further, it has turned south after facing resistance at the 61.8 percent Fibonacci retracement level which suggests weakness.
Prices are trading below all its major exponential moving averages, which suggest prices could drag further.
Furthermore, after testing Rs 1,450 levels on the higher side, the stock once again fell back towards Rs 1,350 levels and sustaining well below its trendline resistance.
The stock may be sold in the range of Rs 1,362 - 1,372 for the target of Rs 1,285, and keep a stop loss above Rs 1,415.
(The author is Technical Analyst, Bonanza Portfolio Ltd)
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