The Nifty index ended the day on a negative note for the fifth consecutive session and closed well below the 11,350 mark, dragged by public sector banks, auto and pharma counters.
The index formed the second leg of lower highs, and lower low formation since June 2019. Nifty should be able to find support around 11,200 Fibonacci ratios in the near term.
A failure to do so would result in a quick drop towards 11,100, which was the previous lower level for Nifty before the outcome of the general election of 2019.
Overall market breadth seems to be weak and the majority of indicators are in the oversold zone, so a technical bounce from current level cannot be ruled out.
On the weekly interval, Nifty is trading above its 50-WEMA which acted as a support level on the previous two occasions. Currently, resistance is seen at 11,500 levels above which momentum is expected to gain.
Failure to cross the 11,500-11,600 levels could push the index down below 11,100-11,000 levels before making the next momentum attempt. If 11,600 get conquered, we would suggest initiating long positions.
Here is a list of top three stocks which could give 7-8% return in the next 3-4 weeks:JK Cement: Buy| CMP: Rs 971.95 | Target: Rs 1,040|Stop Loss: Rs 933|Upside 7%
The stock is trading in a higher top and higher low formation since November 2018 on a weekly interval. In terms of the candlestick, the stock formed a ‘long-legged Doji’ on the weekly chart, which indicates indecision among the participants.
However, prices are consolidation since the past couple of months and are currently trading near trendline support.
On the daily as well as weekly charts, the prices are trading well above its short as well as long-term moving averages along with steady buying at lower levels.
Traders can accumulate the stock in the range of Rs 967 - 975 for the target of Rs 1,040, and a stop loss below Rs 933.
Navin Fluorine International: Buy| CMP: Rs 596.55 | Target: Rs 644|Stop Loss: Rs 570| Upside 8%
The stock is consolidating in a narrow range since the last year. Currently, prices are finding support near the horizontal trendline which acted as support levels on the previous two occasions.
Prices are finding crucial support near 200-DEMA. The momentum oscillators at the current juncture are pointing towards a bounce back in prices. Traders can accumulate the stock in the range of Rs 593 -599 for the target of Rs 644, and a stop loss below 570.
Canara Bank: Sell| LTP: Rs 248.10| Target: Rs 228| Stop Loss: Rs 260| Downside 8%
The stock has drifted below its rising wedge pattern on the weekly interval charts. Prices are clearly showing a lower low formation, which indicates the continuation of the current trend.
On the daily as well as weekly charts, the prices are trading well below its short as well as long-term moving averages. Prices are sustaining well below its trendline resistance which signifies selling pressure ahead.
Traders can sell the stocks on the rally with a range of Rs 246 - 250 for the target of Rs 228, and a stop loss above Rs 260.
(The author is a technical Analyst, Bonanza Portfolio Ltd)
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