These 1 Nifty play, 2 midcaps could return up to 21%

Date: September 25 | Extent of loss: 504 points (1.29 percent)| Reason: Concerns over the health of the economy, news of impeachment inquiry against US President Donald Trump, tension in the Middle East and uncertainty over the US-China trade deal kept the market under pressure. (Image: Reuters)

The Nifty traded in a narrow 150 points range last week, while individual stocks reacted sharply in tandem with their quarterly performance and management guidance. Bajaj Finance, Bajaj Finserv and RBL Bank scaled new 52-week highs after their results last week, while Ashok Leyland, Bajaj Auto and Kotak Mahindra Bank declined 20 percent, 10 percent and 5 percent, respectively.

The rupee continued to trade weak, closing near 69 levels to the dollar and weighing on bond yields and fiscal deficit.

The Nifty ended last week 0.1 percent lower, while midcap and smallcaps declined 1.1 percent and 2.4 percent, respectively.

Performance of sectors were mixed with energy and IT up 1.8 percent and 1.1 percent, while metals, pharma and realty declined 5.9 percent, 2.9 percent and 3.7 percent for the week, respectively.

India VIX gained 10 percent for the week.

On the weekly chart, the Nifty has formed a Doji pattern. We continue to remain positive on the market with key support placed at 10,850, which would act as trend reversal. However, its 76.4 percent and 100 percent Fibonacci extension levels of the prior upmove (9,952-10,929) will work as a major hurdle. The latter are placed at 11,150 and 11,400 levels, respectively.

Considering derivatives expiry this week, we expect the market to be volatile with respect to rollover movements in individual sectors and stocks.

Ceat: Buy | CMP: Rs 1,356 | Target: Rs 1,600-1,650| Stop loss: Rs 1,215 | Return: 21%

The stock reversed after taking support of its long-term moving average and rose to 9-week closing high with a single uptick, where volume was relatively higher than prior weeks.

Due to recent rebound in the stock, the key technical indicators reversed from their lower levels and given positive cross-over.

As per the current weekly set-up, we believe that the stock will soon resume its northward journey and it will recover prior losses.

Thus long position can be initiated here for the target of Rs 1,600-1,650 with a stop loss of Rs 1,215.

Mahanagar Gas: Buy | CMP: Rs 822 | Target: Rs 910-930 | Stop loss: Rs 770 | Return: 13%

The stock remained sideways after a price-wise-correction, where its long-term moving average worked as a key reversal point.

Major technical indicators are positively poised above their averages. We believe the stock will soon out of the correction phase and will rebound.

Thus long position can be initiated here for the target of Rs 910-930 with a stop loss of Rs 770.

Tech Mahindra: Buy | CMP: Rs 659 | Target: Rs 715 | Stop loss: Rs 631 | Return: 8%

The stock has witnessed sharp decline from its life-time-high, where as per the change of polarity principle prior resistance turned as a support and helped to limit the losses.

Later the stock consolidation around that support point and rose to 13-days closing high thereafter. Major technical indicators are in favour of bulls, signalling turnaround in the stock.

Thus long position can be initiated here for the target of Rs 715 with a stop loss of Rs 631.