Ashish Chaturmohta
Indian equity markets shrugged off weak global cues immediately after opening lower and witnessed steady gains through the day to touch intraday high of 11,018 on August 6.
But, profit booking in the last hour of trade saw the Nifty closing off its high at 10,948, up by 0.79 percent. The broader market indices outperformed the benchmark as BSE Midcap and Smallcap gained 1.4 percent and 1.7 percent, respectively, for the day.
The market breadth on the NSE was positive with eight advancing stocks versus three declining. Following August 5 Hammer candle, the Nifty has formed a bullish engulfing pattern on the daily time frame that suggests buying at lower levels.
The index bounced back after touching a low of 10,782. If the index crossed and sustained above 11,020, the index could see a pullback towards 11,150-11,200.
However, if the index breaks below 10,782 then it may decline further towards 11,580 and 10,450. In the Nifty weekly options, maximum open interest for Put is seen at strike price 10,800 followed by 10,700; while for Call maximum open interest is seen at 11,200 followed by 11,000.
India VIX closed for the day at 16.12, down 2.77 percent. VIX is at higher levels after a sharp bounce from lower levels suggesting volatility to continue.
Here are five stocks which could give 12-16 percent return in the next 1-3 months:
Berger Paints (I) Ltd: LTP: Rs 347| Stop loss: Rs 332| Target: Rs 390| Upside: 12 percent
The stock is in a long-term uptrend forming higher tops and higher bottoms on the weekly chart. It hit a high of Rs 350 in August last year and then went on a consolidation mode to form a symmetrical triangle pattern on the weekly chart.
On August 6, the stock witnessed a breakout from the symmetrical triangle pattern with strong momentum and volumes.
MACD line has given a positive crossover with its average above the neutral level of zero on the weekly chart. Thus, the stock can be bought at current levels and on dips towards Rs 343 with a stop loss below Rs 332, and a target of Rs 390.
Dabur India Ltd: Buy| LTP: Rs 433| Stop loss: Rs 415| Target: Rs 490| Upside: 13 percent
After hitting an all-time high of Rs 490 in August last year, the stock started declining towards Rs 360. It witnessed a bounce back from the strong support level of Rs 360 where multiple lows and highs are seen.
The stock has seen a good bounce back from the value area of Rs 360. For the last three weeks, the stock has been trading in a range of Rs 415 and Rs 435.
MACD line has moved above the neutral level of zero on the weekly chart. Thus, the stock can be bought at current levels and on dips towards Rs 429 with a stop loss below Rs 415, and a target of Rs 490.
HDFC Life Insurance: Buy| LTP: Rs 512| Stop loss: Rs 485| Target: 590| Upside: 15 percent
The stock is in an uptrend forming higher tops and higher bottoms on the daily chart for the last five months. Recently, the stock touched an all-time high of Rs 533 and then corrected towards Rs 475.
On August 6, the stock formed a bullish candle with a long body. The upmove was supported with good volumes that suggests a resumption of the uptrend.
Relative strength index (RSI) has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips to Rs 504 with a stop loss below Rs 485, and a target of Rs 590.
Tata Global Beverages: Buy| LTP: Rs 271| Stop loss: Rs 258| Target: Rs 315| Upside: 16 percent
The stock is in an uptrend forming higher tops and higher bottoms on the daily chart since February low of Rs 177. The stock has been witnessing high volumes on up move indicating buying participation.
The rally from the low of Rs 245 was supported with good volumes and momentum suggesting a resumption of the uptrend. The price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on the daily chart.
Thus, the stock can be bought at current levels and on dips towards Rs 267 with a stop loss below Rs 258, and a target of Rs 315.
Muthoot Finance Ltd: Buy| LTP: Rs 625| Stop loss: Rs 600| Target: Rs 700| Upside: 12 percent
The stock has been in an uptrend for the last ten months forming higher tops and higher bottoms on the weekly chart.
The recent up move from low of Rs 571 has been on above-average volumes. The price has moved above the 89-day exponential moving average which has been acting as support on declines.
Stochastics has given positive crossover with its average on the weekly chart. Thus, stock can be bought at current levels and on dips towards Rs 618 with a stop loss below Rs 600, and a target of Rs 700.
The author is Head of Technical and Derivatives, Sanctum Wealth Management.
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