A close beyond the 38.2% Fibonacci retracement level placed at 10,625 can trigger short covering rallies to levels of 10720-10820.
By Aditya Agarwala
The Nifty index Fut. is currently consolidating after testing the lower end of the broadening wedge pattern placed at around 10,300.
Further, a close beyond the 38.2 percent Fibonacci retracement level placed at 10,625 can trigger short covering rallies to levels of 10,720-10,820 being 50 percent and 61.8 percent Fibonacci retracement levels respectively.
However, a trade below 10,300 can resume the corrective phase dragging the index lower to levels of 10,175-10,000.
Moreover, the relative strength index or the RSI has also taken support at the previous support zone of 35 on the daily chart and has turned upwards indicating a short covering move in the coming trading sessions.
Indian VIX has also turned downwards after hitting a high of 24, indicating a fall back to the mean level of 15 levels. Therefore VIX cooling off to 15 levels can trigger a short covering rally in the headline Indices.
Here is a list of top three stocks which could give up to 26% return in 3-4 weeks:
HCL Infosystems Ltd: Buy | Target: Rs 76| Stop Loss: Rs 51 | Return 25%
On the weekly chart, HCL Infosystems Ltd is on the verge of a breakout from an Ascending Triangle pattern suggesting the start of a bull trend on the cards. A sustained trade above Rs 63 i.e. neckline of the pattern with healthy volumes may trigger a bullish breakout.
On the daily chart, the stock is consolidating sideways after taking support at 78.6 percent Fibonacci retracement level. A sustained trade above Rs 51 will extend the bullishness.
The RSI has formed a positive divergence with respect to price on the daily chart after taking support at the Rs 40 level affirming the bullishness. The stock may be bought in the range of Rs 59-62 for targets of Rs 73-76, keeping a stop loss below Rs 51.
Sanghvi Movers Ltd: Buy | Target: Rs 225| Stop Loss: Rs 159| Return 26%
On the weekly chart, Sanghvi Movers Ltd is on the verge of a breakout from a falling channel pattern. The neckline of the pattern is placed at 207, and a sustained trade above the neckline with healthy volumes can resume the uptrend.
On the daily chart, stock halted at the 78.6 percent Fibonacci retracement support level placed at Rs 154. A sustained trade above this support can take the stock higher.
The RSI has turned upwards breaking out of the Bollinger Bands suggesting bullishness. The stock may be bought in the range of Rs 176-180 for a target of Rs 207-225, keeping a stop loss below Rs 159.
Wonderla Holidays Ltd: Buy | Target: Rs 460| Stop Loss: Rs 345| Return 19%
On the weekly chart, Wonderla Holidays Ltd is on the verge of a breakout from a channel resistance placed at Rs 292 levels. A sustained trade above Rs 292 can resume the uptrend taking the stock higher.
On the daily chart, it has formed a bullish harmonic pattern suggesting higher levels.
Further, RSI has also broken out from the upper Bollinger band suggesting higher levels.
The stock may be sold in the range of Rs 384-388 for targets of Rs 445-460 keeping a stop loss below Rs 345.Disclaimer: The author Head Technical Research, Way2Wealth Brokers Pvt. Ltd. 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.