Shabbir Kayyumi of Narnolia Financial Advisors said majority of oscillators are in the overbought zone and the possibility of profit-booking at higher levels cannot be ruled out
Narnolia Financial Advisors
The market has been gradually moving higher since July. No reversal in price pattern is seen yet on the weekly chart. Profit-booking is expected due to the overstretching nature of oscillators as the Nifty is approaching its major psychological resistance of 11,500.
The Nifty's five-day closing simple moving average (DMA) stands around 11,425. Until the benchmark index breaches 11,360 levels decisively on the downside, it has a potential to extend this rally towards the 11,500 and 11,560 mark.
Immediate trend line resistance on lower timeframe stands around 11,465 levels. A breakout above this level would see it head towards 11,550.
Majority of oscillators are in the overbought zone. The possibility of profit-booking at higher levels cannot be ruled out.
The derivatives structure suggests an immediate trading range between 11,200 and 11,500. Highest put open interest is seen around 11,000 strike, followed by 11,200 strike. Highest call OI stands around 11,500 strike, followed by 11,600 strike.
We expect sideways to bullish movement in coming sessions, within a range of 11,550 on the higher side and 11,300 on the lower side. However, stock-specific action may be seen. A close below 11,300 levels will result in the Nifty correcting to 11,150/11,050 levels.
Here is the list of five stocks that could return 15-23 percent in the short term:
PFC: Buy | Buy Above: Rs 89|Target: Rs 110| Stop Loss: Rs 79| Upside: 23%
Scrip spurted from a low of Rs 67, it showed pullback on upside & marked the high of Rs 88 mark. This pullback rally and consolidation has taken the form of Pole and Flag price pattern from last few days.
Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further. Emerging Inverted Head &Shoulder pattern on daily time frame is suggesting bullish momentum in the scrip.
Indicator and oscillator are also showing a conducive scenario in coming sessions. So based on the mentioned technical structure, we expect that price may see momentum on the upside after giving the breakout above Rs 89 and hit target of Rs 105 and Rs 115 mark.
SAIL: Buy | Buy Range: Rs 76-77|Target: Rs 94| Stop Loss: Rs 67| Upside: 23%
Steel Authority of India has taken a rising trend line support recently. Emerging inverted Head &Shoulder is also creating a buying opportunity in the scrip.
RSI is also taking support from its upward sloping line suggesting upside momentum. Rising histogram in the positive territory is also indicating bullishness in the scrip.
One can take long position in the scrip from the levels of Rs 76-77 for the target of Rs 91 and Rs 97 marks with the stop loss of Rs 67 mark.
SBI: Buy | Buy Range: Rs 295-298 |Target: Rs 360| Stop Loss: Rs 265| Upside: 22%
Stock bottomed out near the levels of Rs 230-235 and has been forming Cup and Handle as being mother pattern on weekly chart.
The emergence of a Bullish engulfing candle is showing up swing move towards channel resistance line from where the stock can give a breakout on the upside. Scrip has respected the uptrend line and prices have started running in the channel.
Sustainability above 61.8 percent Fibonacci retracement of the fall from Rs 351 to Rs 230 marks also creating positive rhythm in the scrip.
Declining MACD histogram and sustainability of RSI above 50 adds the conviction of buying the scrip around Rs 295 for the target of Rs 347 and Rs 370 with stop loss of Rs 265 mark.
Shriram Transport Finance Corporation: Buy | Buy Range: Rs 1,380-1,395|Target: Rs 1,600| Stop Loss: Rs 1,275| Upside: 15%
It has confirmed the upside reversal from its current downtrend. It also gave bullish breakout above 50 DMA and 200 DMA on July 26, 2018 and thereafter it is consolidating above these DMA’s for last few days.
Inverted head and shoulder pattern is also indicating a positive move in the coming days. So some fresh buying is expected from the current levels in the short term.
Therefore we are recommending a long position in the stock near Rs 1,380-1,395 with a stop loss 1,275. Upside target is Rs 1,600.
Siemens: Buy | Buy Above: Rs 1,043|Target: Rs 1,180| Stop Loss: Rs 960| Upside: 13%
Scrip seems bottoming out at its lower levels of Rs 930 mark from where it formed back to back three bullish candles on stchart suggesting upsurge on the higher side.
Sustainability above downward sloping line along with positive crossover in MACD and divergence in RSI is giving cues that scrip can take a turn on the northward side.
The principal of polarity can provide strong support in coming sessions. Aforementioned rationale suggests buying in the scrip above Rs 1,043 for the target of Rs 1,160 and Rs 1,200 with the stop loss of Rs 960 mark.Disclaimer: The author is Head of Technical & Derivative Research at Narnolia Financial Advisors. 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.