The Indian equity market failed to sustain upward momentum on a weekly basis after hitting record highs earlier, and continued to trade in a range without any decisive direction.
During the week under review, Nifty failed to sustain near its record-high level but managed to hold above the psychological level of 11,600-odd levels on closing basis.
Nifty on weekly basis slipped marginally by 0.19 percent on account of volatility. It formed a bearish resembling ‘hanging man’ kind of candlestick pattern on the weekly chart which indicates a reversal in the trend, while it made small bullish candlestick pattern on daily scale led by buying in consumption stocks.
However, the momentum indicator signaled a positive divergence with its weekly RSI 66 odd levels, and MACD continued to trade above its signal-line.
The equity market is likely to remain volatile going forward on account of general election coupled with weak global growth prospects which are expected to deepen the sentiment.
Further, the anticipation of below-average monsoon coupled with looming concerns of debt crisis in a mutual fund is likely to weigh negatively in the equity segment.
Strong corporate earnings are likely to be the impetus to limit a downside risk of Nifty, and thus, advise to remain with selective opportunities for long-position.
With strict stop loss, we maintain a weekly level of 11,710 on upside and 11,500 levels on the downside.
Here is a list of top three stocks which could give 3-5% return in the next 1 month:
ITC: Buy| Target: Rs. 321| Stop-Loss: Rs. 290 | Upside: 5%
ITC witnessed a strong breakout on the daily scale and moved upward from its short-term resistance coming from 50-days moving average placed at Rs 295 odd levels. It also managed to move above its earlier swing-high of Rs 303 levels on closing basis.
The scrip took strong support at Rs 290 odd levels to reverse upward from the consolidation phase, and also witnessed strong volume support.
The scrip formed a bullish engulfing kind of candlestick pattern with a long body on a weekly basis coupled with ‘long’ bullish pattern on a daily scale.
The momentum indicator also outlined a positive divergence in price with weekly RSI at 61 odd levels coupled with MACD making the bullish crossover to trade above its Signal-Line on the daily scale. We have a buy recommendation for ITC which is currently trading at Rs 305.75.
Kajaria Ceramics: Buy| Target: Rs 647| Stop-Loss: Rs 595| Upside: 4%
Kajaria Ceramics saw a significant breakout on the weekly scale from the previous swing-high of Rs 597 levels coupled with decent volume activity.
It continued to remain in an uptrend trajectory on its six-month price chart. It continued to form higher-highs and higher-lows for a consistent period with minor healthy correction periodically. Strong support currently is seen at Rs 550 levels.
It formed a bullish candlestick pattern on both weekly and daily price chart scale supported by decent volume growth.
The momentum indicator outlined a positive divergence in price with weekly RSI at 72 odd levels and MACD trading above its Signal-Line. We have a buy recommendation for Kajaria Ceramics.
Radico Khaitan: Sell | Target: Rs. 347 | Stop-Loss: Rs 375 | Downside: 3%
Radico Khaitan continued to trade in a negative trajectory for over two weeks despite a positive market-breath. It fell from a higher price band of Rs 450-415 odd levels towards a low of Rs 353 levels.
The scrip breached below its crucial support of 200-days moving average placed at Rs 385 odd levels, and it currently trades below all the moving average levels.
The scrip formed a ‘long’ bearish candlestick pattern on both weekly and daily price chart indicating a persistent selling pressure.
The momentum indicator continued to outline a weak trend with weekly RSI at 41 odd levels coupled with MACD starting to trade below its Signal-Line. We have a sell recommendation for Radico Khaitan.
(The author is Founder & CEO, 5nance.com)
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