Dinesh Rohira of 5nance.com expects the Nifty to trade at 11,445 on the upside and 11,270 on the downside on a weekly basis
The Indian equity market continued its upward momentum on a week-to-week (WoW) basis, registering multiple record highs on the price chart.
However, the market turned cautious in two trading sessions to trade down in the backdrop of Monetary Policy Committee’s rate hike, coupled with re-escalation of trade tariff by US President Donald Trump which erased some of the gains.
The Nifty tested a major level just below 11,400 but failed to sustain over trade war concerns.
After closing on a higher note on Tuesday at 11,356 levels, the index slipped to a low of 11,234 in the week gone by. Towards the weekend session, the index managed to recoup some of the initial losses to close at 11,360.80, up 0.73 percent on a weekly basis.
After breaking down from the psychological level of 11,300 on Thursday, the index formed a bearish Belt Hold pattern on the daily candlestick chart. The pattern got negated as Nifty formed a bullish candle in Friday's trade.
The weekly relative strength index (RSI) stood at 71 indicating marginal divergence. The moving average convergence divergence continued its bullish trajectory as it stood above the signal line.
With a breakout from the higher band, the index is likely to face immediate resistance at 11,400-11,390 levels in the coming week, while supports are placed at 11,200.
As we are mid-way through the earnings season with sentiment positive, we expect the market to continue its positive bias in the short term.
However, a re-escalation of the trade war between US and China is expected to keep the index volatile. We advise investors to be stock specific only to build fresh long positions.
Given the fresh rally, we expect the Nifty to trade at 11,445 on the upside and 11,270 on the downside on a weekly basis.
Here is a list of three stocks that could return 6-10% in 1 months:
JK Paper: Buy | Target: Rs. 167| Stop-loss: Rs. 135 | Return: 10%
JK Paper remained under a consolidation phase in last six-month from a price band of Rs 149-128, taking a strong support at Rs 99 levels, and made a robust rebound from this level recently.
It also made a crucial breakout from the moving average of 200-days EMA placed at Rs 131, thus indicating a reversal trend. The scrip also witnessed a significant volume growth managing to gain about 25 percent on weekly basis.
On the weekly price chart, the scrip registered a solid bullish candlestick pattern indicating a reversal in trend favoring upward momentum.
Further, the weekly RSI at 60 signaled a buying regime at a current level along with positive cues from MACD suggesting an upward shift.
The scrip is currently holding a resistance at Rs 169 and the immediate support level is placed at Rs 126. We have a buy recommendation for JK Paper which is currently trading at Rs. 151.25
Sical Logistics Ltd: Buy | Target: Rs. 203| Stop-loss: Rs. 174| Return: 8%
Sical Logistics formed a reversal trend favoring upward momentum after consolidating on multiple price level from Rs 232-194 towards Rs 163 levels in the last six months.
Although it remained flat during an early trade of the week, it gained strong momentum towards the weekend to close above 200-days EMA placed at Rs 182 levels.
It also witnessed a substantial support from volume buildup as compared to average level. The positive breakout on the weekly basis aided the scrip to form a strong bullish candlestick pattern indicating a sustained trend at the current level.
The weekly RSI trend registered an upward momentum at 64 suggesting a buying regime along with MACD trading on a bullish momentum.
The scrip has a support at Rs 164 levels and medium-term resistance level at Rs 216. We have a buy recommendation for Sical Logistics which is currently trading at Rs. 188.25
Redington (India) Ltd: Sell | Target: Rs. 98 | Stop-loss: Rs. 115 | Return: 6%
Redington India Ltd continued to consolidate on its long-term price chart, slipping below a price band of 158 levels to form multiple low levels over sustain selling pressure.
Last week the scrip slipped below a long-term moving average level to touch 52-weeks low and thus indicating a sustained pressure on selling regime. Further, the volume support continued to remain subdued over a negative trajectory.
The price chart continued to indicate consolidation phase with a formation of bearish candlestick pattern on its weekly price chart post-breach below important average level.
Further, the secondary momentum trend continued to indicate negative signal with RSI slipping below at 34 coupled with the bearish outlook from MACD trend.
The scrip is facing a resistance at 128 levels and crucial support at 95 levels. We have a sell recommendation for Redington India which is currently trading at Rs. 104.20Disclaimer: The author is Founder & CEO, 5nance.com. 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.