Rajesh Palviya
The Nifty was off to a negative start the previous week but witnessed buying at lower levels to end the week on a strong note. It closed at 10,946, with a loss of 77 points on a weekly basis.
On the weekly chart, the index formed a bearish candle, with a long lower shadow indicating buying at lower levels. The index is moving in a lower top and lower bottom formation on the weekly chart, indicating a negative bias.
The chart pattern suggests that if the Nifty crosses and sustains above 11,000, it will witness buying that would take the index towards 11,150-11,200 levels. However, if index breaks below 10,900, it will witness selling, which would take the Nifty towards 10,800-10,750.
The Nifty is trading below 20, 50 and 100 day-simple moving averages (SMAs), which are important short-term moving averages indicating negative bias in the short to medium term.
The Nifty continues to remain in a downtrend in the short to medium term, so selling on rallies continues to be our preferred strategy. For the week, we expect the Nifty to trade in the range of 11,200-10,750 with mixed bias.
The weekly strength indicator RSI is marginally below its reference line, while momentum oscillator Stochastic has turned positive, indicating positive bias.
Bank Nifty
The Bank Nifty started the week on a negative note, but witnessed buying at lower levels to end the week on a strong note. The Bank Nifty closed at 27,248, with a loss of 180 points on a weekly basis.
On the weekly chart, the index formed a bearish candle with a long lower shadow indicating buying at lower levels. The index is moving in a lower top and lower bottom formation on the weekly chart, indicating negative bias.
The chart pattern suggests that if the Bank Nifty crosses and sustains above 27,300, it will witness buying that would take the index towards 27,500-27,800 levels. However, if the index breaks below 27,000, it will witness selling, taking the index towards 26,800-26,500.
The Bank Nifty is trading below 20, 50 and 100 day SMAs, indicating negative bias in the short to medium term. It continues to remain in a downtrend in the short to medium term, so selling on rallies continues to be our preferred strategy. For the week, we expect the Bank Nifty to trade in the range of 28,000-26,500 with mixed bias.
The weekly strength indicator RSI is marginally below its reference line, while momentum oscillator Stochastic has turned positive, indicating positive bias.
Here is the list of five stocks that could give 5-7 percent return in near term:
Maruti Suzuki | Buying range: Rs 6,180-6,100 | Stoploss: Rs 5,990 | Target: Rs 6,440-6,550 | Return: 5-7 percent
On the daily chart, the stock has decisively broken out from its 'down sloping channel' on closing basis and sustaining above the same. This breakout has accompanied increase in volumes, which supports bullish sentiment ahead.
The daily as well as weekly strength indicator RSI and the momentum indicator Stochastic are both in positive territory, which supports upside momentum to continue in near term. The stock price is sustaining well above its 20 and 50 day-SMA which supports bullish sentiment ahead.
REC | Buying range: Rs 150-146 | Stoploss: Rs 143 | Target: Rs 156-160 | Return: 5-7 percent
On the daily chart, the stock price has decisively broken out from its 'down sloping trendline' levels of Rs 146-145 on closing basis and is sustaining above the same. This breakout has been accompanied with increase in volumes, which supports bullish sentiment ahead.
The daily as well as weekly strength indicator RSI and the momentum indicator Stochastic are both in positive territory, which supports upside momentum to continue in near term. Stock price is sustaining well above its 20, 50 and 100-day SMA, which supports bullish sentiment ahead.
Dr Reddy's Labs | Buying range: Rs 2,720-2,670 | Stoploss: Rs 2,630 | Target: Rs 2,830-2,880 | Return: 5-7 percent
On the daily chart, the stock has decisively broken out from its 'multiple resistance zone' levels of Rs 2,710-2,720 on closing basis and is sustaining above the same. This breakout has accompanied with increase in volumes, which supports bullish sentiment ahead.
The daily as well as weekly strength indicator RSI and the momentum indicator Stochastic both are in positive territory which supports upside momentum to continue in near term. Stock price is sustaining well above its 20, 50 and 100 day SMA which supports bullish sentiments ahead.
Bajaj Finance | Buying range: Rs 3,360-3,300 | Stoploss: Rs 3,240 | Target: Rs 3,500-3,550 | Return: 5-7 percent
On the daily chart stock price has decisively broken out from 'Head & Shoulder' pattern and broke its neckline levels of Rs 3,360-3,350 on closing basis and sustaining above the same. This breakout has accompanied with increase in volumes which supports bullish sentiments ahead.
The daily strength indicator RSI and the momentum indicator Stochastic both are in positive territory, which supports upside momentum to continue in near term. Stock price is sustaining well above its 20, 50 and 100-day SMA which supports bullish sentiment ahead.
Hindalco Industries | Buying range: Rs 188-185 | Stoploss: Rs 182 | Target: Rs 196-200 | Return: 5-7 percent
On the daily chart, the stock has decisively broken out from its 'consolidation range' of Rs 185-172 on closing basis and is sustaining above it. This breakout is accompanied with increase in volumes, which supports bullish sentiment ahead.
The daily as well as weekly strength indicator RSI and the momentum indicator Stochastic are both in positive territory, which supports upside momentum to continue in near term. Stock price is sustaining well above its 20-day SMA, which supports bullish sentiment ahead.
(The author is DGM - Research (Head Technical & Derivatives Research) at Axis Securities Limited.)
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