Going forward, the index may consolidate in the range of 11,450 and 11,550. A decisive take out of 11,550 may induce a quick recovery towards 11,650-11,700.
The Nifty started off the week with a breakdown of the rising channel on the daily chart which it was trading within since mid-July. The follow-up selling in the next two days took the index to 11,393, which is roughly 90% retracement level of the previous rally from 11,340 to 11,760.
The Nifty finished the session on Wednesday with a ‘Hammer’ formation. A hammer typically has a small body with a long lower wick and no or negligible upper wick.
A Hammer is formed after a correction and it signifies a possibility of a price recovery in the near-term. However, a confirmation of bullish closing is required for a decent recovery in the market.
On the options front, 11,600 and 11,800 ended the day with most open interest thus showing resistance level whereas on the lower end 11,400 remained as most open interest rich strike price.
Going forward, the index may consolidate in the range of 11,450 and 11,550. A decisive take out of 11550 may induce a quick recovery towards 11,650-11,700.
However, failure to hold above 11,450-400 support zone may trigger a correction towards 11,300-11,220.
Here is a list of top three stocks which could give 9-12% return in the next 1 month:
Bajaj Auto: Buy| LTP: Rs 2,758 | Target: Rs 3,000 | Stop Loss: Rs 2,640| Return 9%
On the daily charts, the price has started off lower but managed to recoup the entire loss of the previous session. In addition, price found support just above the rising trend line on the daily chart.
The weekly momentum oscillator, RSI (14) is in positive divergence and currently in a bullish crossover. Traders can accumulate the stock in the range of Rs 2765-2775 for the target of Rs 3000 and a stop loss below Rs 2640.
Vedanta: Buy| LTP: Rs. 228.75 | Target: Rs 254| Stop Loss: Rs 219| Return 11%
The stock has given a symmetrical triangle breakout on the daily chart which suggests that traders have raised interest in the stock.
In addition, we observed that the breakout prices were backed by higher volume. The stock has been sustaining above 21-EMA (exponential moving average) on a closing basis for the last several days which means traders are willing to pay higher than short-term average closing price.
Traders can accumulate the stock in the range of 227-231 for the target of 254 and a stop loss below 219.
Yes Bank: Buy| LTP: Rs.344.05 | Target: Rs 388| Stop Loss: Rs 324| Return 12%
The stock price has fallen sharply from 404 to 332 in few trading sessions. On the daily chart, an engulfing pattern has formed which suggests a possibility of the bullish reversal in the stock.
Also, the stock has just made a low around its previous swing low of 327. A positive divergence is also visible in the daily RSI (14) which may set a bullish momentum in the stock price.
Traders can accumulate the stock in the range of 340-345 for the target of 388 and a stop loss below 324.Disclaimer: The author is a Technical Research Analyst at Bonanza Portfolio Ltd. 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.The Great Diwali Discount!
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