In case of breakout, the index will face hurdle around its psychological level of 12,000.
Indices witnessed a dramatic turnaround on September 20 when the finance minister announced corporate tax cut from 35 percent to 25 percent. Since then, the entire chart structure has made a drastically-positive change in Nifty and the banking index.
The benchmark index witnessed profit booking on September 25 after a historical up move. Despite the recent indecisive set-up, the view will remain positive as its key technical indicator was positively poised above their averages and signals strength at current set up. The 100-day simple moving average is currently pegged near 11,400, which will act as a crucial support in the coming days.
In case the index slips below the upper band of recent positive gap (placed near 11,400 level), a near-term corrective move cannot be ruled out. On the lower side, Nifty will find strong support around 11,200 mark, which is supported by a 50 EMA on weekly interval. However, a stable move above its mid-July high (placed at 11,707 level) will bring back the exuberance of climbing higher levels back in trade. In case of a breakout, the index will face hurdle around its psychological level of 12,000.
Here are the top three stocks which can give good return:
Voltas: Buy | CMP: Rs 667.45 | Target: Rs 721 | Stop loss: Rs 634 | Return: 8 percent
A recent aggressive price movement in Voltas has pushed the price above its trendline resistance which is led by the classic “Rectangle Pattern Breakout” on weekly interval. The rectangle pattern normally act as a continuation pattern when appear at top of the chart. A spurt in prices has made stock to settle above its 50 & 100 exponential moving averages on weekly time frame, which is a positive sign for the stock.
Momentum oscillator RSI (14) has made itself settled in a range of 45 to 65, which is a bullish range shift for the indicator on weekly chart. Traders can accumulate the stock in the range of Rs 665 - 669 for target of Rs 721 with a stop loss below Rs 634.
Pfizer: Buy | CMP: Rs 3,321.45 | Target: Rs 3,585 | Stop loss: Rs 3,154 | Return: 8 percent
A recent up move has created optimism in the prices, which has pushed the stock above its trendline resistance. On the weekly interval, prices have witnessed a breakout of a “Symmetrical Triangle Pattern” which is placed at Rs 3,355 levels. The momentum oscillator RSI (14) has formed a rounding bottom formation near 40 level and currently reading above 50 levels with positive crossover on the cards. The stock is trading above its 50 and 100 exponential moving averages on weekly time frame, which is positive for the prices.
Traders can accumulate the stock in the range of Rs 3,315 - 3,330 for target of Rs 3,585 with a stop loss below Rs 3,154.
Zee Entertainment: Sell | CMP: Rs 273.50 | Target: Rs 254.50 | Stop loss: Rs 284.50 | Return: 7 percent
Despite a blockbuster movement in Nifty and other sectors, Zee Entertainment continued its lower-low lower-high formation in majority of time frame. This week, prices breach its horizontal trendline support which was placed at around Rs 300 odd levels. Indicator and oscillator aren’t look promising as majority of them are trending lower with negative crossover on the cards. Prices are trading below all its major exponential moving averages, which is negative for the prices.
The stock may be sold in the range of Rs 274.50 – 272 for targets of Rs 254.50, and keep a stop loss above Rs 284.50.
The author is Technical Research 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.)Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.