Shitij Gandhi
After a pullback towards 10,500 last week, once again Nifty surged higher this week and managed to close above 10,650 levels on Tuesday.
The derivatives data at current levels reflects that there is a lot of outstanding short positions in the Nifty and we can expect another round of short covering probably towards expiry.
As per current derivatives data, Nifty can move towards 10,800-10,850 mark this week as the market undertone remains bullish with the support of consistent short-covering.
The bullish scenario is likely to continue with Nifty having multiple strong supports at lower levels around 10,600 and 10,625 spot.
Currently, Nifty is moving up with a decent addition in open interest (OI) which indicates strength in the current trend. Options writers were seen active in the recent rally as we have seen put writing in 10,500 and 10,600 strikes along with the unwinding in calls.
On the technical front, 10,600-10,620 spot levels is a strong support zone for the index and the current trend is likely to continue towards 10,800-10,850 levels.
Here is a list of top three stocks which could give 7-9% return in the next 1 month:
State Bank of India: Buy| Target: Rs 305| Stop Loss: Rs 272| Return 7%
After a sharp recovery from 245 levels, the stock surpassed its short and long-term moving averages and has been consolidating in a range of 275-295 from the last three weeks.
On the daily charts, the stock has formed a bullish flag pattern and is on the verge of a breakout above the falling trend line of the pattern.
The positive divergence on the secondary indicators like Rsi and stochastic are also pointing towards next upside in prices. Traders can accumulate the stock in a range of 285-290 for the upside target of 305 levels and a stop loss below 272.
PVR: Buy| Target: Rs 1,550| Stop Loss: Rs 1,350| Return 8%
After making a double bottom pattern on the daily charts, the stock witnessed a “V” shaped recovery in prices and managed to hold above its short and long-term moving averages.
At the current juncture, the stock has been consolidating in a range of 1370-1450 for more than ten trading sessions and has formed a rectangle pattern which is generally treated as a continuation pattern of the previous trend.
Traders can accumulate the stock in a range of 1430-1445 for the upside target of 1550 levels and a stop loss below 1350.
Cummins India: Buy| Target: Rs 870| Stop Loss: Rs 750| Return 9%
The stock has been trading in a sloping channel on the weekly charts with the formation on lower highs and lower low pattern since the beginning of the year.
However, this month we have observed a breakout above the falling trend line of the sloping channel along with hefty breakout above the long-term moving averages on the weekly charts.
On the daily charts as well, the stock is maintaining its up move and is trading well above its short and long-term moving averages. Traders can accumulate the stock in a range of 795-805 for the upside target of 870 levels and a stop loss below 750.
Disclaimer: The author is a Senior Research Analyst, SMC Global Securities. The views and investment tips expressed by investment experts 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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