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Last Updated : Apr 01, 2019 08:11 AM IST | Source: Moneycontrol.com

Podcast | Stock picks of the day: Nifty likely to consolidate in 11,600-11,200 range

We believe ongoing consolidation would help it to cool off the overbought situation of the weekly stochastic oscillator (at 90), in turn, making the market healthier.

Moneycontrol Contributor @moneycontrolcom
 
 
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Dharmesh Shah

Nifty consolidated in a range last week but closed with a bullish candle on a weekly scale. We expect the index to consolidate this week, albeit with a positive bias in the broader range of 11,600-11,200 eventually paving the way for next leg of the up move.

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The upper band of consolidation of 11,600 is based on the confluence of the following technical parameters:

a) price parity of October-December, 2018 up move (9.3 percent) projected from February low of 10585, around 11,600

b) 123.6% external retracement of recent corrective decline (11,573–11,312), placed at 11,635.

Structurally, the index is undergoing a secondary phase of consolidation after approaching price parity of October-December rally 9.3 percent.

We believe ongoing consolidation would help it to cool off the overbought situation of the weekly stochastic oscillator (at 90), in turn, making the market healthier.

The overall structural improvement makes us believe the ongoing corrective decline would get anchored around 11,200.

Nifty Midcap, Smallcap indices over the past 10 sessions have retraced merely 23.6 percent of the preceding nine sessions of the up move, indicating a slower pace of retracement, highlighting robust price structure.

The current corrective decline in quality stocks should be capitalised on as an incremental buying opportunity for the next leg of the up move.

Here are three stocks that could give 10-20 percent return in the next 1-6 months:

PVR: Buy | LTP: Rs 1,644 | Target: Rs 1,805 | Stop Loss: Rs 1,497 | Return 10% Time Frame 6 months

The share price of PVR has formed a higher bottom around Rs 1,430 during February 2019 which validates the change of polarity principle as May-November 2018 resistance now reverses its role as a support.

From a structural perspective, the current up move augurs well and reinforces a positive stance for an impending breakout above the lifetime highs of Rs 1,665 in the coming weeks.

The short term support for the stock is placed around Rs 1,500 levels, and we expect the stock to resolve higher in coming months and head towards Rs 1,805.

IPCA Laboratories: Buy | LTP: Rs 982 | Target: Rs 1,080 | Stop Loss: Rs 840 | Upside – 10% | Time Frame 6 Months

The share price of IPCA Laboratories has registered a breakout from the five-year consolidation which signals a structural turnaround and continuation of positive momentum in the medium term.

The stock has witnessed a faster retracement of the previous major decline as 14-quarter decline (906-400) is completely retraced in just six quarters signalling positive price structure.

The stock has major short-term support around Rs 840-850 levels. We expect the stock to continue its current up move and test levels of Rs 1090 in the next 6 months.

NBCC: Buy | LTP: Rs 66.30 | Target: Rs 80 | Stop Loss: Rs 56 | Upside – 20% | Time Frame 6 Months

The share price of NBCC has registered a bullish Double Bottom breakout signalling reversal of the corrective trend and offers fresh entry opportunity.

Longest pullback since November 2017 along with a faster retracement as six weeks of decline has been completely retraced in four weeks.

A faster retirement of the previous decline signals strength in the current up move and a positive price structure. The stock has support at Rs 56.00 levels, and we expect the stock to head higher towards August 2018 high of Rs 80 as it is the 61.8 percent retracement of the last decline (Rs 109 to 47).

(The author is Head Technical at ICICI Direct.com Research)

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.

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First Published on Apr 1, 2019 08:11 am
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