Exponential price movement in the last few days pushed benchmark index above crucial psychological levels of 12,000 and managed to close above it, almost after 8 months. Nifty has continued to form flat bottom green Heikin-Ashi candlestick pattern on the daily and weekly time frame which is supportive of bullish price movement.
Although some momentum oscillators are in overbought zone, the possibility of index hitting life high in the coming week cannot be ruled out as prices are trading well above its all-important moving averages 20/50/200 DMA suggests long side opportunity.
At the same time, ROC indicator is trading above zero line and it gave bullish crossover with its 10-day SMA, signaling momentum has just picked up and it has more fuel left to push the index on the higher side with an ease.
Furthermore, the current movement is a typical behaviour of Wave III and it is an extended impulse wave which suggests the possibility of a strong up move towards 12,500 in the coming days.
Bank Nifty
Bank Nifty continued it's dominating rally in the last week and managed to give a strong breakout by trading above 25,000 mark. Moreover, the banking index formed a golden crossover a bullish formation which is supportive of prices in the mid-term.
Here is a list of three stocks which could return 12-15 percent in short term:
Tata Chemicals: Buy Around Rs 315 | Target: Rs 365 | Stop Loss: Rs 290 | Upside: 15 percent
Formation of lower shadow near foot of the weekly trend line indicating that declines are being bought and momentum could reverse. After retesting of trend line, scrip has been forming higher highs and lows from last three days. Daily Stochastic showing positive crossover at lower reference line suggest pullback. Sustainability above significant moving averages provides key support at lower levels. Once stock will give a decisive close above Rs 320, then it will ready to move on upside till Rs 365 level. View will invalidate if stock get close below Rs 290 (near 200 DMA).
Canara Bank: Buy Around Rs 91 | Target: Rs 105 | Stop Loss: Rs 84 | Upside: 15 percent
After a prolonged downtrend, the stock is showing a sign of life as stock gave falling trend line breakout on upside at lower levels which suggest reversal is round the corner. The daily RSI is bouncing back from the important support level along with positive crossover in stochastic and other momentum indicators suggesting a short term pullback on upside in the stock in the coming days. Traders can initiate buying around Rs 91 level for the target of Rs 105 a with stop loss of Rs 84 mark.
Adani Ports and Special Economic Zone: Buy Around Rs 368 | Target: Rs 415 | Stop Loss: Rs 349 | Upside: 12 percent
Stock is expected to give ascending triangle breakout on daily chart with decent volume. Bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 & 50 DMA's indicating strength. Key support lies at Rs 340 levels until this break decisively, long position can held. Investors can take entry around Rs 365 with stop loss of Rs 349 on closing basis for the target of Rs 410.
(Shabbir Kayyumi is the Head of Technical Research at Narnolia Financial Advisors Ltd.)
Disclosure: Narnolia Financial Advisors Ltd. is a SEBI registered Research Analyst. The company/analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past.
Disclaimer: 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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