Podcast | Stock picks of the day: See Nifty rallying to 11,450 levels

The Nifty started last week on a positive note and rallied higher to surpass the 11,050 mark on a closing basis.

Although the index witnessed some retracement on September 12 from its highs, the minor dip was bought into on the last day of the week and it ended well above the 11,050 mark.

Despite a truncated week, the Nifty managed to clock decent gains over a percent on a weekly basis, keeping hopes alive for further relief.

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Sameet Chavan

Chief Analyst- Technicals & Derivatives|Angel Broking

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Last week, we had highlighted the formation of a reversal pattern on the weekly chart of the Nifty, Bank Nifty and the Nifty Midcap indices.

This, along with the ‘Fibonacci Time Retracement’, had indicated a probability of an upmove in the broader markets. During the week, the index along with the broader market witnessed a decent upmove which was on expected lines.

Now, if we observe the Nifty daily chart, we see that the recent price action has also led to a formation of an ‘Inverse Head & Shoulders’ pattern which is a trend reversal pattern.

A move above the 11,100 marks will lead to a breakout, which could then provide impetus to the ongoing rally. Looking at the overall development in the last couple of weeks, we will not be surprised to see it happening soon (probably on September 16 itself).

This will lead to some short-covering moves first and then attract traders who have been waiting on the sidelines for this confirmation.

In this scenario, the northward trajectory will continue towards 11,250-11,300 first and then may even extend up to 11,400-11,450 levels.

Hence, we continue with our recent optimistic stance and advice traders not to venture into taking any contra bets. The immediate supports for the index are placed around 10,945 and 10,890 levels.

Here is a list of stocks that could return 4-5% in the next 3-4 weeks:

Tata Steel: Buy| LTP: Rs 376.35| Target: Rs 388| Stop Loss: Rs 354| Upside 4%

After the recent correction, things are now looking a bit encouraging for the stock. Also, the entire metal space has shown life in the last couple of weeks after an ease in trade tensions on the global front which augurs well for the counter.

Technically speaking, after consolidating around its multi-year lows, the stock managed to traverse its daily ’20-EMA’ for the first time in last two months.

This resulted in a confirmation of ‘Dragonfly Doji’ pattern on the weekly chart, which has been confirmed now. We recommend buying this counter for a target of Rs 388 over the next few days. The stop loss should be fixed at Rs 354.

Bharat Forge: Buy| LTP: Rs 412.60| Target: Rs 434| Stop Loss: Rs 401| Upside 5%

Along with the metal universe, the entire ‘Auto and Auto-ancillary’ seems to be gearing up for some relief. Although it has done well in the last couple of weeks, it is trying to catch up with its peers.

On the daily chart, the stock has confirmed a breakout from the daily ’20-EMA’ and looking at the rising values of oscillators, we expect it to head higher in the forthcoming week.

Going with all the above evidence, we recommend buying this stock at current levels for a target of Rs 434 over the next few days. The stop loss can be placed at Rs 401.

(The author is Chief Analyst- Technical & Derivatives, Angel Broking)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.