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Technical Check: 10 breakout stocks that could give double-digit returns in 2020

Based on Monthly and Quarterly chart Nifty is preparing for hitting the level of minimum 13000 and maximum 14400 in the next 12 to 18 months based on Gann angles.

January 03, 2020 / 09:49 AM IST
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Indian markets gave double-digit returns in 2019 and technical charts suggest that the rally may not be over yet. The Nifty50 could scale Mount 14K in the new year.

The Nifty went past 12,000 in 2019 to make a record high near 12,300. There could be some consolidation after the budget which should be used to accumulate quality stocks.

“We feel the Nifty might correct to even 12,000/11,900, however, it would be an opportunity to buy index stocks with a positional view. Based on monthly and quarterly charts, the Nifty is preparing for hitting the level of minimum 13,000 and maximum 14,400 in the next 12 to 18 months based on Gann angles,” said Shrikant S Chouhan, Senior Vice-President (Equity Technical Research) at Kotak Securities.

“The reason behind such a big target is that the market is moving higher but the pace of it is gradual. Even though the Nifty is trading at all-time highs and the euphoric trend is still missing and till the participants are not becoming greedy investors, markets are not going to come down drastically.”

Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, expects a rally of 12%-15% in 2020 from the current levels. The Nifty, he says, can head towards 14,000.

A list of top 10 stocks that can give double-digit returns in 2020. Returns are calculated based on January 1 closing price and the holding period is 3-12 months.

Brokerage Firm: Motilal Oswal

Hindalco: Buy| LTP: Rs 214| Target: Rs 280| Stop Loss: Rs 192| Upside 30%| Horizon 3-12 months

Hindalco formed Bullish 5-0, a Bullish Harmonic Pattern, on the monthly chart and has started rebounding from the potential reversal zone .

Recently, the stock gave a breakout from the Falling Channel on the weekly chart and is sustaining above the breakout level. Price also gave a breakout from a Triangle pattern on the daily chart with healthy volumes.

The stock has formed a Bullish Engulfing pattern on the quarterly chart, which is a positive sign.

The Relative Strength Indicator (RSI) gave a trendline breakout and was moving northward on the monthly chart, indicating strength in the counter.

Looking at the technical evidence, traders should buy the stock in the zone of Rs 210-Rs 218 for an up move towards Rs 260-Rs 280. Stop-loss should be placed at Rs 192 on a closing basis.

Tata Motors: Buy| LTP: Rs 184.40| Target: Rs 225| Stop Loss: Rs 165| Upside 22%

The Nifty Auto index gave a trendline breakout on the daily chart and sustaining well above it . Thus we may see a continuation of ongoing momentum in auto stocks in the coming weeks.

Tata Motors has rallied sharply in the last three months with healthy volumes, which is a positive sign for the stock.

Recently, the stock gave a breakout from the Bullish Flag pattern on the daily chart and is sustaining well above the breakout level.

We are also witnessing a Golden Crossover of 50 and 200-day SMA on the daily chart, indicating further strength in counter.

Looking at the price structure, we won't be surprised to see an up move towards Rs 215-Rs 225 levels in the coming months. Thus, any decline towards Rs 177 shall be used as a buying opportunity with a stop-loss of Rs 165 on a closing basis.

PVR: Buy| LTP: Rs 1,900| Target: Rs 2,200| Stop Loss: Rs 1795| Upside 16%

The stock is moving in a strong uptrend by maintaining higher highs - higher lows on the weekly chart. It has been in a consolidation phase from the last three weeks that resulted in a Bullish Flag pattern on the weekly scale.

It gave a breakout from the Pole & Flag pattern and is sustaining above the same. The momentum oscillator RSI is placed positively on both the daily and the weekly charts, thus showing strength in the counter.

Considering the overall chart structure, we are expecting the stock to move towards Rs 2,200 in the coming months. Any dip towards Rs 1,860 should be used as a buying opportunity with a stop loss of Rs 1,795 on a closing basis.

Max Financial Services Ltd: Buy| LTP: Rs 542| Target: Rs 670| Stop Loss: Rs 490| Upside 23%

Max Financial Services Limited (MFSL) took support around 100-day EMA on the monthly chart and turned northwards. The stock gave a range breakout in November and rallied sharply.

The upmove was supported by healthy volumes, indicating a buying interest of stronger hands. The ongoing up move is a combination of impulse and corrective moves, which is a healthy sign for the counter as a strident rally generally fizzles out quickly.

Currently, the price is moving above its previous swing highs and getting ready for further rally towards Rs 640-Rs 670 levels. Traders are advised to buy the stock in the range of Rs 520 -Rs 540 with a stop loss of Rs 490 on a closing basis

City Union Bank: Buy| LTP: Rs 233| Target: Rs 275| Stop Loss: Rs 215| Upside 18%

City Union Bank (CUB) is a steady performer and trading around its all-time high. It is making higher highs-higher lows on the weekly chart and is moving within the territory of a Rising Channel for the last 34 months.

The stock is giving a breakout from a Bullish Flag pattern on the daily chart. RSI and MACD indicator is placed positively along with a set of moving averages, indicating strength in the counter.

The overall chart structure is quite strong, thus we advise traders to buy the stock at the current juncture and on dips to Rs 230 with a stop loss of Rs 215 on a closing basis. On the upside, we may see Rs 275 levels in the coming months.

Expert: Gaurav Garg, Head of Research, CapitalVia Global Research Limited-Investment Advisor

Dabur India Ltd: Buy| LTP: Rs 460| Target Rs 580| Upside

The stock closed in positive for the eighth consecutive calendar year. Since 2012, it has rallied over 362 percent.

From mid 2019, the stock is trading in a higher-highs and  higher-lows formation on a daily basis and is sustaining above its upward rising trendline.

The stock is trading above its 21, 50 and 200-day exponential moving averages. On weekly charts, RSI is in a higher low formation and sustaining above 55, which is showing strength for the northward direction.

Manappuram Finance Ltd: Buy| LTP: Rs 177| Target: Rs 220| Upside 24%

The stock rallied over 90 percent in the calendar year 2019. The price has formed higher highs & higher lows formation in a broader time frame.

After consolidating in the range of Rs 172-154, the stock has given a breakout from its Bullish Flag Pattern. The RSI in daily and weekly charts continue.

MACD on the daily chart crossed the Zero Line with positive crossover, which indicates a continued upward trend.

ICICI Securities Ltd: Buy| LTP: Rs 414| Target: Rs 550| Upside 32%

In 2019, the stock traded with volatility in the first two months, with the stock price declining 27.63 percent and after consolidating in a narrow range, the stock gained more than 100 percent since August 2019.

The stock is trading above its important moving averages and is trading in higher highs and higher lows formation.

On the daily and the weekly charts, the RSI is sustaining above 65 and MACD indicator above zero levels with positive crossover suggesting its positive momentum.

Affle (India) Ltd: Buy| LTP: Rs 1616| Target: Rs 1960| Upside 21%

The stock was listed on the NSE in August 2019 and has jumped over 80 percent from its listing price within four months. The price has bounced back from its important support zone (38.2% Fib Retracement & 200-day EMA) and trading above its 21, 50 and 200-day exponential moving averages and MACD crossed the Zero Line from below, which indicates the price may continue its upward trend.

Adani Enterprises Ltd: Buy| LTP: Rs 207| Target Rs 250| Upside 20%

After consolidating in a broad range of Rs 115-183, the stock has given a breakout from its “Rectangle Pattern”. The prices are trading above its 21, 50 and 200-day exponential moving averages with the positive MA crossover.

On the weekly chart, RSI continue its higher low formation and MACD indicator is sustaining above zero levels, with a positive crossover, a bullish sign for the stock.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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