Failure to cross the 11,775 mark could push the index below 11,460-11,300 levels before making the next momentum attempt
The Nifty has been consolidating in a narrow range after reacting negatively on account of the Budget. The index managed to defend 11,500-11,460 mark and bounced back from lower levels, which is a positive sign.
The trend remains positive but the momentum is still missing. Since the past couple of days, we have witnessed a negative breath in benchmark index, which is a sign of limited liquidity.
The Nifty opened July 17 on a positive note, traded in a very narrow range and formed a spinning top candlestick pattern on the daily chart.
The BankNifty defended the 30,200 mark and bounced higher, which is supported by its 50-day Exponential Moving Average (EMA).
On the options front, we observe shifting of position from 11,300 Put to the 11,600 Put. This indicates shifting of Nifty lower levels to the higher side.
On the Call side, higher open interest is seen in 11,700, 11,800, 11,900 strikes and highest OI in the 12,000 strike. So, there is resistance near 11,700-11,800 zones. This data simply indicates a narrowing range in the market in coming days.
The medium-term trend remains positive as the benchmark index is trading at a higher high-higher low formation in a Rising Channel Pattern.
Currently, resistance is seen at 11,775 levels, above which momentum is expected to gain significantly. However, failure to cross the 11,775 mark could push the index down below 11,460-11,300 levels, before making the next momentum attempt.
If 11,775 get taken out, we would suggest initiating aggressive long positions.
Here is a list of top three stocks that could return 6-8 percent in the next three-to-four weeks:
Avenue Supermarts: Buy| LTP: Rs 1463.80| Target: Rs 1565 | Stop Loss: Rs 1400 | Upside 7%
The stock has given a Falling Wedge Pattern breakout on the weekly time frame. The counter has completed its corrective leg and is gearing for the next leg of impulse wave on the higher side.
The recent up move has pushed the price higher above all its major exponential moving averages (EMA) on the weekly charts.
Moreover, the MACD indicator is in a positive crossover below the zero line, which is acting as an early indication of a trend reversal.
Traders can accumulate the stock in the range of Rs 1458 - 1470 for the target of Rs 1565, and a stop loss below Rs 1400.
CESC: Buy | LTP: Rs 783.70| Target: Rs 845 | Stop Loss: Rs 744 | Upside 8%
After a prolonged consolidation, the stock has managed to close above its trendline resistance on higher time frame (weekly). Additionally, the stock has witnessed a breakout of W-pattern on the weekly charts which can move the prices towards Rs 845 zone.
The stock is smoothly sustaining above its 50 & 100-day exponential moving averages (EMA). Currently, RSI (14) is reading above 60 levels with positive crossover.
Traders can accumulate the stock in the range of Rs 780 - 786 for the target of Rs 845, and a stop loss below Rs 744.
Bharti Airtel: Sell| LTP: Rs 346.25 | Target: Rs 326 | Stop Loss: Rs 358 | Upside 6%
The stock is trading in a higher high, and a higher low formation since the past couple of months which resulted in a Rising channel pattern.
In Wednesday’s price action, the candle which got formed closed below its trendline support and witnessed Rising Channel Breakdown on the daily chart.
The recent price action is below the 20-day exponential moving average. The RSI (14) has also drifted below 50 levels with negative crossover and slanting lower.
Traders can sell the stocks on the rally with a range of Rs 345 – 348 for the target of Rs 326, and a stop loss above Rs 358.
(The author is Technical Analyst, Bonanza Portfolio Ltd.)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.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .