Hadrien Mendonca
It has been a splendid week for Indian equity markets index-wise. The Sensex hit a fresh lifetime high on Thursday while the Nifty, as well as Bank Nifty, are close to their respective lifetime peaks.
On the other hand, pain in the midcap and smallcap space is prolonging. The Nifty has broken out from the Cup and Handle pattern on the weekly chart. This indicates a continuation of its previous primary trend which was on the higher side.
A close above 10,930 has confirmed a breakout. If the same unfolds the way it should, then the Nifty is likely to rally another 300 points. This would help it break past its previous all-time highs.
The Bank Nifty too has broken out from a Pennant pattern on the weekly timeframe. This indicates that further upside is on the cards.
Immediate resistance is seen around 27,150 levels. A break above the resistance zone could lift the Bank Nifty higher towards its previous all-time peak of 27,661 levels.
Here is a list of stocks which could return 7-9 percent return in the next 1-2 months:
Wipro: Buy| Target: Rs 303| Stop Loss: Rs 267| Returns 8.5%
Since hitting its peak of Rs 334 in January 2018, the stock has been in a declining trend. However, in the recent few weeks, Wipro saw a halt in its declining trend and has finally broken out from a falling channel pattern on the weekly chart.
The price outburst has also been accompanied with a smart uptick in traded volumes. In addition, Wipro is also on the verge of breaking past its long-term 200-DEMA. We expect the stock to rally higher towards its potential target of Rs 303 in the medium term.
Dr Reddy’s Labs: Buy| Target: Rs 2,517| Stop Loss: Rs 2,272| Returns 7%
The stock has been consolidating for the past four weeks and is finally on the verge of breaking out from a larger consolidation base. A break above the Rs 2,400 levels will confirm the breakout.
After the breakout above Rs 2400, we expect Dr. Reddy’s labs to rally towards its potential target of Rs 2,517 in the medium term. Every long position should be protected with a stop loss placed below Rs 2,272.
Bajaj Electricals: Buy| Target: Rs 611| Stop Loss: Rs 536| Returns 9%
After consolidating for the past five weeks and going through a phase of time correction, the stock has finally broken out from a Rectangular Pattern on the daily chart.
In terms of volumes, the stock has witnessed a constant rise in the past three weeks which adds strength to the current breakout. We expect Bajaj Electricals to make an attempt to move higher towards its potential target of Rs 611 in the medium term.
Disclaimer: The author is a Senior Technical Analyst, IIFL. 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.
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