Hadrien Mendonca
The Nifty continues to trade in a narrow band for the past one week. In fact, every attempt to move higher in the recent past has met with equal selling pressure.
Going forward, the scenario may turn challenging if the Nifty breaks below its crucial 10,650 level. This is the rising trend line support zone of the enter Symmetrical Triangle pattern within which the Nifty is currently trading in.
For the Nifty to resume its northbound journey, it has to break above 10,930 levels.
The Bank Nifty is on the verge of a breakdown too. Crucial support for the Bank Nifty index is now seen around its 21-day Double Exponential Moving Average which is placed at 26,350. If the Bank Nifty fails to hold above the same then further weakness cannot be ruled out in the near term.
The Nifty PSU Bank index has already broken down from its rising channel pattern on the weekly charts, which indicates that the these banks are likely to be the pain point going forward. It will be in the interest of traders to remain stock specific at the current juncture.
Here is a list of top 3 stocks that could return 9 percent in about a month:
Glenmark Pharma: Buy| Target: Rs 652| Stop Loss: Rs 579| Returns 8.5%
Our weekly chart analysis indicates that Glenmark has broken out from the falling channel pattern. The stock has also managed to surpass its long-term 200-DEMA on the daily chart and has also managed to close above the same.
In addition, other momentum oscillators also indicate that the current momentum is likely to extend further. We expect the stock to move higher and every long position should be protected with a stop loss below Rs 579 on a closing basis.
M&M Financial Ltd: Buy| Target Rs 535| Stop Loss: Rs 473| Returns 9%
The stock has been in a declining phase for the past eight weeks and has finally broken out from a Symmetrical Triangle pattern on the daily chart.
The breakout has also been accompanied with a smart uptick in traded volumes. Relative strength index (RSI) indicates a positive crossover which further accentuates our bullish stance on the stock.
We expect, M&M Finance to move higher towards its potential target of Rs 535 which translates into a 9 percent returns.
Bata India Ltd: Buy| Target: Rs 909| Stop Loss: Rs 799| Returns 9%
The stock has been maintaining its higher top higher bottom structure. It has been consolidating for the past seven months and has finally broken out from a Cup and Handle pattern on the weekly chart.
The breakout has also been accompanied by credible volumes expansion. We expect Bata to extend the momentum and make an attempt to move towards its potential target of Rs 909 in the medium term.
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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