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Last Updated : Aug 08, 2018 09:29 AM IST | Source: Moneycontrol.com

Short covering may push Nifty to 11,500 levels this week; 3 stocks to buy now

“11,320-11,300 spot is strong support zone for the Nifty and the current trend is likely to continue towards 11,500-11,550 levels,” says Shitij Gandhi of SMC Global Securities

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Shitij Gandhi
SMC Global Securities

The Nifty is trading near record highs. Derivatives data shows there is still a lot of outstanding short positions in the Nifty and index calls. We can expect another round of short covering which could push the index towards the 11,500-11,550 mark this week.

We expect the bullish scenario to continue, with the Nifty having multiple supports at lower levels (around 11,200 and 11,300 spot).

Options writers were seen active in the recent rally as we have seen put writing at 11,200 and 11,300 strikes along with call unwinding. We have been continuously seeing open interest additions after the July expiry which indicates long build-up.

Among Nifty call options, the 11,500 strike call has the highest open interest of more than 37 lakh shares. In put options, 11,000 strike holds the maximum open interest of over 50 lakh shares. On the technical front, 11,320-11,300 spot is a strong support zone and the current trend is likely to continue towards 11,500-11,550 levels.

Here is a list of top three stocks that could return 11-13 percent in the next 1 month:

Godrej Industries: Buy | Target: Rs 690 | Stop loss: Rs 580 | Return: 11%

Last week the stock has given a consolidation breakout above Rs 620 levels after trading in the broader range of Rs 520-620 for more than eight months.

The prolonged consolidation breakout has been seen along with hefty volumes which suggest that bulls are taking control over the scrip.

Additionally, the momentum oscillators on the weekly interval are also supporting for the next up move in prices. So, traders can accumulate the stock in range of Rs 620-630 for the target of Rs 690 and a stop loss below Rs 580.

Time Technoplast: Buy | Target: Rs 175 | Stop loss: Rs 143 | Return: 13%

The stock has been maintaining its downtrend since the beginning of the year and was trading in a sloping channel while forming a lower top and lower bottom formation on the daily charts.

However, in the last three months of consolidation at lower levels, the stock has formed a symmetrical triangle pattern on the daily charts while trading in the range of Rs 120-150.

The fresh breakout above the pattern formation has been witnessed this week with hefty volumes hints for more upside in prices moving forward. So, traders can accumulate the stock in a range of Rs 154-158 for the upside target of Rs 175 and a stop loss below Rs 143.

Info Edge (India): Buy | Target: Rs 1605 | Stop loss: Rs 1350 | Return: 11%

After consolidating in a broader range of Rs 1100-1300 for more than four months, the stock has given a consolidation breakout and tested Rs 1,500 levels in quick session.

Once again, this week we saw fresh buying in the stock as momentum is seen picking up in the prices with marginally higher volumes along with positive divergence on secondary indicators like Rsi and stochastic.

Additionally, the stock has been maintaining well above its short and long-term moving averages and trading in a rising channel. So traders can accumulate the stock in a range of Rs 1445-1480 for the upside target of Rs 1605 levels with a stop loss below Rs 1350.

Disclaimer: The author is a Senior Research Analyst, SMC Global Securities Ltd. The views and investment tips expressed by investment experts 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.
First Published on Aug 8, 2018 09:29 am
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