Dinesh Rohira
The Indian equity market remained volatile to trade in negative trajectory after posting three consecutive gains on a weekly basis. Despite an initial rally, weak sentiment across global markets triggered a sell-off across financials, metals and auto sectors during the last session.
It also signaled a cautious stance among traders ahead of November F&O expiry due on Thursday. During the week under review, the Nifty index managed to break out from a resistance of 10,750 levels on a closing basis and touched a weekly high of 10,774 levels, but it failed to sustain the rally to slip below a crucial level of 10,550 over lack of buying sentiment.
It made a weekly low of 10,512 levels and closed the session at 10,526.75, down by 0.85 percent on a weekly basis. The drag primarily came from Nifty IT and Metal which was down by 3.61 percent and 5.67 percent, respectively. While the Nifty Realty and Media were the top gainers, up by 2.14 percent and 1.88 percent, respectively.
On the weekly price chart, the Nifty index formed a solid bearish candlestick pattern coupled with the small bearish pattern on its daily price chart and therefore, indicating a negative trajectory.
The momentum indicator signaled a negative divergent in price with its weekly RSI at 44 levels down from earlier level, while MACD continued to trade below its signal line.
With index breaching below important level of 10,550 on a closing basis, the immediate resistance is seen at 10,682 levels for the index and support at 10,440 levels.
With November F&O expiry due this week, coupled with the persistent sell-off in the global market, the Nifty index is expected to remain volatile in the coming session.
Further, a breach of 10,550 levels is expected to keep index under selling regime to test 10,440 levels while the upside is likely to remain capped at weekly high.
The market was trading in a narrow range for the past few sessions, but it is advisable for the coming week to trade on stock specific opportunities only.
We continue to maintain a rangebound trading level for the index at 10,650 levels on the upside and 10,440 levels on the downside.
Here is a list of top three stocks which could give 3-5% return in next 1 month:
Kajaria Ceramics: Buy| Target: Rs. 473| Stop Loss: Rs 426 | Upside: 5%
After remaining under selling regime over the last six months form 52-weeks low of 310 levels, Kajaria Ceramics made a strong reversal trend in the recent period to trade in a positive trajectory.
The stock managed to decisively breakout from its crucial resistance of 100-days EMA placed at Rs 433 levels. It took a strong support at 325-315 levels to reverse a bullish trend with minor consolidation and witnessed a positive volume trajectory in the same period to augur positive trend.
The momentum indicator outlined a positive divergent in price with its RSI at 70 levels coupled with MACD trading above its Signal-Line. We have a buy recommendation for Kajaria Ceramics which is currently trading at Rs 449.80
Adani Ports & SEZ: Buy| Target: Rs 383| Stop Loss: Rs 351| Upside: 4%
Adani Port witnessed a strong upward momentum over one month after making a healthy consolidation from an upper price-band of 399-380 levels towards a low of 300 odd levels.
Post this lower base, the scrip continued to trade on a positive trajectory and this week it made an important breakout from its 200-days moving average placed at 364 levels on closing basis.
Along with strong volume growth, the scrip also formed a bullish candlestick pattern on its weekly price chart.
Further, the momentum indicator favored the current trend with RSI at 68 levels coupled with MACD trading above its Single-Line. We have a buy recommendation for Adani Port which is currently trading at Rs. 368.15
Shriram Transport Finance: Sell | Target: Rs. 1,120 | Stop Loss: Rs. 1,201 | Downside: 3%
Shriram Transport Finance remained under selling regime throughout the week despite its attempt to reverse the trend upward but failed to sustain on a higher level.
The scrip continued to consolidate over six-months from 1540-1400 levels towards low of 1000 odd levels which remains a strong support area for the scrip, and breach below this level is expected to trigger another bear trend.
It currently trades below all the moving average levels on weekly basis except for its 200-days EMA placed 1104 which will remain crucial level on a medium-term basis.
The scrip formed a solid bearish candlestick pattern on both daily and weekly price chart, and therefore indicating a sustained pressure on scrip which will keep selling regime intact.
The weekly RSI stood at 44 levels indicating negative price divergent while MACD continues to trade below its Signal-Line. We have a SELL recommendation for Shriram Transport Finance which is currently trading at Rs. 1155.45.
The author is Founder & CEO, 5nance.com.
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