Dinesh Rohira of 5nance.com said he continued to maintain a range bound trading level at 10,690 levels on the upside and 10,370 levels on the downside.
The Indian equity market made a staggering rebound during the week gone by as corporate banks reported a strong set of earnings growth for Q2FY19 coupled with positive auto sales growth in October.
Further, a consolation in crude oil from the high of $86 dollar to $73 levels helped in strengthening of rupee, which improved the overall market sentiment.
In the week gone by, the Nifty index managed to decisively breach upward from its short-term moving average level of 20-day EMA placed at 10,442 levels.
It further managed to move above the resistance of 10,500 to touch a week-high of 10,606 levels but failed to sustain to close at 10,553 levels with a gain of 5.2 percent on the weekly basis.
The rally was primarily led by buying across broad sectors, especially in PSU banks, realty, and auto, which were up by 13.6 percent, 7.7 percent, and 7 percent, respectively, on the weekly basis.
The index reversed formation to long bullish candlestick pattern on its weekly price chart while it formed a ‘Hammer’ reversal kind of pattern on the daily chart.
The weekly RSI on chart stood at 51 levels up from earlier level, but MACD continued to trade below its signal line.
Given a strong breakout from important levels, the upper resistance for the index is placed at 10,700-levels with immediate support at 10,405 levels.
With the revival in earnings reported by many companies in Q2FY19 coupled with short-term relief owing to relaxation in trade war, the equity market is expected to witness positive momentum for a couple of sessions ahead of the festive season.
However, an overhung concern on the macro front followed by looming distress of liquidity crunch in the financial sector is expected to turn against the rally, and thus it will be advisable to remain selective and deploy bottom-up strategy.
We continue to maintain a range bound trading level at 10,690-levels on the upside and 10,370-levels on the downside.
Here is a list of top 3 stocks which could give 3-5% return in the next one month:
Hindalco Industries: Buy | Target: Rs 253 | Stop-Loss: Rs 238 | Upside: 5%
Hindalco remained in an uptrend trajectory during the last week after trading in a range-bound level over the last one month. It made a correction from price-band of Rs 253 levels towards a low of Rs 216, down by about 14 percent before initiating the current rally trend.
It managed to break out from its 200-day level placed at Rs 234 levels coupled with strong volume growth during past sessions and thus indicating a buying sentiment at the current level.
The momentum indicator outlined a positive trend at the current level with RSI at 57 levels gradually moving upward, while MACD is likely to make a bullish crossover in the coming session to trade above its signal line.
Marico: Buy | Target: Rs 352 | Stop-Loss: Rs 320 | Upside: 4%
After remaining in a consolidation phase for the last six months to decline from highs of Rs 381 towards a strong support zone of Rs 303-294 levels. Marico witnessed a strong reversal trend favoring upward rally for a consecutive session.
Marico managed to break out from its long-term moving average of 200-day EMA level placed at 330 levels during the last week and saw a substantial volume growth which favored the rally.
The momentum indicator outlined a positive trend at current levels with weekly RSI at 62 levels, while MACD is likely to witness a bullish crossover in the coming session to trade above its signal line. We have a buy recommendation for Marico which is currently trading at Rs 338.05.
Info Edge India: Sell| Target: Rs 1425 | Stop-Loss: Rs 1520 | Downside: 3%
Info Edge continued to remain under selling pressure throughout the week declining from a price band of Rs 1,620 levels toward a low of Rs 1,450 levels on the weekly basis.
The scrip further slipped from an important level of 50-day EMA placed at Rs 1,492 levels indicating a weakness on a short-term basis.
It further formed a bearish pattern on its daily price chart along with subdued volume growth. The RSI stood at 44 levels while MACD marginally trades above its Signal-Line which is expected to breach in the coming session. We have a sell recommendation for Info Edge which is currently trading at Rs 1,470.55.Disclaimer: The author is Founder & CEO, 5nance.com. 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.