Vinay Rajani
Nifty has been trading in the narrow range of 11,564-11,787 on closing basis for last one month. The Nifty has been taking support around 11,550 and the same should be kept as a stop loss in long positions.
Any close above 11800 would result in a breakout from the consolidation and in that case, we can expect Nifty to rally towards 12,000 and 12,430.
The Nifty has recently violated 20-day EMA support of 11,637. And, now a close below 11,550, which has been the lower level of the recent consolidation in Nifty, would be considered bearish trend reversal for the short-term.
Nifty is placed above medium to long-term moving averages of 20, 50, 100 and 200 days. The gap between 50-DMA and 200-DMA has been widening gradually, which indicates that bullish momentum is intact for medium to long term.
Oscillators are showing weakness in the trend but unless price support is broken, short term trend would be considered bullish in Nifty. To conclude, Nifty is holding positional up trend but fallen into the short term consolidation.
A close above 11,800 would result in a breakout and dive below 11,550 would result in a bearish trend reversal. The Midcap and Smallcap stocks are going weak and therefore it would be advisable to stick to the largecaps with strict stop losses, as far as short-term trading in concerned.
Here are three stocks that could give 7-11 percent return in the next month:
UltraTech Cement: Buy| LTP: Rs 4519| Target Rs 5,000| Stop loss: Rs 4,200| Return: 11 percent
Recently, the stock registered a new all-time high above Rs 4,600. It formed a bullish golden crossover on the charts that indicates a long-term trend reversal.
The stock has broken out from the long consolidation which was held on for the last nine quarters. The company has also posted nice quarterly results.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it around Rs 4,400, for the target of Rs 5,000, and keep a stop loss at Rs 4,200 on a closing basis.
ITC: Buy| LTP: Rs 307| Target: Rs 330| Stop loss: Rs 295| Return: 7.5 percent
The stock witnessed a bullish golden crossover on the charts, where 50-DMA surpassed 200-DMA on the upside, indicating a long-term bullish trend reversal.
From the FMCG space, ITC looks the strongest stock for the short-term. The stock price has surpassed the crucial resistance level of Rs 300 after a long time.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at 300, for the target of Rs 330, and keep a closing stop loss at Rs 295.
ONGC: Buy| LTP: Rs 170| Target: Rs 185| Stop loss: Rs 160| Return: 9 percent
The stock price has broken out from the consolidation range of Rs 155-160. It has been sustaining above its 200-DMA. The short-term moving averages have been trading above long term moving averages.
Indicators and oscillators have been showing strength on the daily and weekly charts. Long term trend line breakout is seen on the weekly charts.
Considering the technical evidence discussed above, we recommend buying the stock between CMP and Rs 165 for the target of Rs 185 and keep a stop loss at Rs 160 on a closing basis.
The author is Senior Manager, Advisory - PCG at HDFC Securities.
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