The Indian equity market traded in a volatile range with a negative bias on a week-to-week basis. The index closed with losses of 0.4 percent for the week ended June 7.
The downgrade in Commercial Papers of DHFL to ‘Default’ category by Crisil & ICRA led to a selloff across NBFC/HCFs companies, and continued to hurt the sentiment.
Despite 25 bps cut in repo rate at 5.75 percent by the RBI during June MPC meet with a change in policy to ‘accommodative’ stance, it failed to lift the sentiment with no clear action to address distress NBFC sector.
The momentum indicator continued to signal positive divergence with weekly RSI at 63 odd levels and MACD is trading above its signal-line on a weekly scale.
The weekly resistance for the index is now seen at 12021 odd levels while support is placed at 11,830-11,704 odd levels.
With a series of credit rating downgrade for company like DHFL and Eros International, the likelihood of similar actions for troubled companies is likely to have a negative impact on sentiment in short-term basis.
We continue to advise investors to remain selective on long position with positive price momentum, and any weaknesses at a higher level to be used for booking profit. We maintain a rangebound level at 12000 levels on upside and 11,704 levels on the downside.
Here is a list of top three stocks which could give 2-6% return in the next 1 month:
Power Finance Corporation: Buy | LTP: Rs 134 | Target: Rs 140 | Stop Loss: Rs. 125 | Upside 4%
Power Finance Corporation continued to trade in a positive trajectory (for 4 consecutive weeks) despite a weak market breadth to form higher highs in recent sessions, and made new 52-weeks high on the daily scale.
The scrip also managed to move upward from resistance of 20-days moving average level placed at Rs 120 odd levels on a weekly basis with a surge in volume during the same period, and a strong support zone is seen at Rs 110 odd levels.
The scrip formed candlestick pattern on weekly price chart for the fourth period which indicates massive buying interest across different level, and formed a bullish pattern on the daily price chart.
The momentum indicator also outlined a positive divergence in price with weekly RSI at 69 odd levels coupled with MACD making a bullish crossover to trade above its Signal-Line.
Coal India Ltd: Buy | LTP: Rs 265 | Target: Rs. 280 | Stop Loss: Rs. 255 | Upside 6%
Coal India continued to trade in a positive trajectory on its long-term price chart to form higher-high and higher-lows, and also managed to move upward from its previous swing-high of Rs 258 on a closing basis which indicates a strong trend for scrip.
The scrip also witnessed a breakout from its 200-days moving average placed at Rs 249 odd levels, and currently holds strong support zone at Rs 225-230 odd levels after making a healthy correction from the previous swing high.
The buying regime helped the scrip to form ‘long’ bullish candlestick pattern on the weekly price chart for two consecutive coupled with strong bullish candlestick pattern on a daily price chart indicating buying interest at the current level.
The momentum indicator also outlined a positive divergence in price with weekly RSI at 63 odd levels coupled with MACD managing to trade above its Signal-Line on a daily scale.
Aurobindo Pharma Ltd: Sell | LTP: Rs 619.80 | Target: Rs 605 | Stop Loss: Rs. 645 |Downside 2%
Aurobindo Pharma continued to trade in negative the trajectory for an extended period from a higher price band for almost one month, and subsequently slipped from its crucial support of Rs 650 odd levels in current session.
With sixth consecutive weeks of negative trade, the scrip now trades below all the moving average as it recently slipped from 20-days moving average placed at Rs 688 levels on closing basis.
The scrip formed ‘long’ bearish candlestick pattern on both weekly and daily price which indicates persistent selling pressure from higher level.
The momentum indicator continued to outline a weak trend with RSI at 33 odd levels coupled with MACD making a bearish crossover in recent session to trade below its Signal-Line.
(The author is Founder & CEO, 5nance.com.)
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