Hadrien MendoncaIIFL
After hitting a fresh life-time high in the previous trading session, Nifty consolidated around the 10,470-10,500 zone on Thursday. Once again post fresh highs, traders preferred to take some money off the table as the PSU banks, select auto and media stocks were on the receiving end.
The Nifty50 formed a bearish engulfing kind of a pattern on Wednesday followed by a shooting star candlestick pattern indicating indices may enter into another phase of consolidation.
The current uptrend will resume once we see Nifty breaking past the 10,480-10,500 resistance zone on a closing basis. Post which we expect Nifty making a dash towards the 10,580-10,610 zone.
On the downside, support zone is seen around the 10,380-10,400 zone. Yet again focus should be on the mid and the small-cap stocks that are showing signs of outperformance.
This suggests that sticking to stocks outside the index would provide better returns at the current juncture.
Here is a list of three stocks that could give up to 15% returns in the short term:
Ramco Systems: BUY| Target Rs610| Stop Loss Rs490| Return 15.7%
Since November 2016 the stock has been forming a rounding bottom kind of a formation which indicates a reversal pattern is in the making. Ramco System has in the previous week broken out from the bottoming out phase which are signs of a continuation.
The stock is comfortably trading in a higher top higher bottom structure. In addition, the stock is also maintaining the short term exponential moving averages. This further accentuates our bullish stance on the stock. We expect a medium-term target of Rs 610.
GIC Housing Finance: BUY| Target Rs520| Stop Loss Rs443| Returns 11.3%
The stock has been in a declining mode for the past six months, since then GIC Housing has corrected from highs of Rs 620 to lows of Rs 390 recorded in the previous week. This correction phase saw the stock enter into a lower top lower bottom cycle.
However, the recent run-up has seen GIC Housing piercing the neckline of the declining channel pattern with a strong uptick in traded volumes.
This indicates that a trend reversal is on the cards. In this process, GIC has also surpassed its previous peak of Rs 462 which further adds positivity to the stock. We expect a decent 11% upside for the stock in the medium term.
L&T: BUY| Target Rs1360| Stop Loss Rs1202| Returns 9%
After consolidating for over five months the stock has broken out from a Cup and handle pattern on the daily chart. L&T is currently managing to stay above the price pattern breakout convincingly.
In addition, our daily chart analysis also indicates that the price structure is also currently exhibiting a flag pattern breakout, targeting the Rs 1,360 level on the upside.
Rising volumes and positive crossover indicate that the current momentum is likely to extend further. We expect L&T to rise higher; it is advisable to keep a stop loss of Rs 1202.
Disclaimer: The author is Senior Technical Analyst, IIFL. 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.
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