Ashish Chaturmohta
After last week’s gains, the markets got off to a negative start with the Nifty losing 0.74 percent on Monday to close at 10,937 levels. Increase in wholesale inflation also piled pressure on the market.
The market breadth on the NSE was in favour of declines with 5 shares falling for every 1 gaining stock. The broader markets were hit hard as the BSE Mid and Smallcap indices lost 2.5 percent each for the day.
The Nifty has formed a long bearish belt hold candle for the day. The index managed to find support at previous high - 10,929 - which will now act as support.
Holding above 10,929 levels, the index can see a bounce towards 11,000-11,020 levels. For the uptrend to continue, 11,080 needs to be taken out decisively.
Trading below 10,929 on a sustainable basis will see further profit booking towards 10,880-10,860 zone. A 38.2 percent retracement of the rise from 10,557 to 11,078 levels and rising gap area of July 10 is seen.
In Nifty options, huge amount of put unwinding was seen at 11,000 from 10,600 strikes and call writing was seen in 11,000 and 11,200 strikes, which suggests that the upside is likely to capped and the market could see pressure on the downside.
India VIX needs to be watched as it is turning up from support levels after seeing a jump of 5.3 percent to 12.95 levels.
Here is a list of 5 stocks that could return 8-13 percent in the next 1-2 months:
HDFC: Buy| CMP: Rs 1,991 | Stop loss: Rs 1,920 | Target: Rs 2,150 | Return: 8%
The stock is in a long-term uptrend forming higher tops and higher bottoms on the weekly chart. After hitting high of Rs 1,986 in the month of January this year, the stock has been consolidating between Rs 1,940 and Rs 1,750 odd levels for the last six months.
In Monday’s trading session price hit an all-time high of Rs 1,997.5 and closed at a new high with above average volumes. On the weekly chart, the price has given a breakout from the Bollinger Band with the expansion of band suggesting a continuation of the trend in the direction of the breakout.
The momentum indicators are in bullish mode on daily as well as on the weekly charts. Thus, the stock can be bought at current level and on dips to Rs 1,970 with a stop loss below Rs 1,920 for a target of Rs 2,150 levels.
Yes Bank: Buy | CMP: Rs 376 | Stop loss: Rs 360 | Target: Rs 425 | Return: 13%
For the last one year, the stock has been range bound between Rs 380 and Rs 285 odd levels and has been consolidating at its all-time high levels. The stock has formed a bullish inverted head and shoulders pattern on the weekly chart which it broke out from last week.
The daily ADX line indicator of trend strength has moved to a neutral level of 20 indicating strength in the uptrend. The price has given a breakout from the Bollinger band with the expansion of band on the weekly chart suggesting a continuation of the trend in direction of the breakout.
In the last couple of weeks, the stock has witnessed good volumes which suggest that buying participation and the stock is likely to see a breakout from all-time high levels.
Thus, the stock can be bought at current level and on dips to Rs 370 with a stop loss below Rs 360 and a target of Rs 425 levels.
Nestle India: Buy | CMP: Rs 10,20| Stop loss: Rs 9,850 | Target: Rs 11,500 | Return: 12%
The stock witnessed a major breakout from its multi-year consolidation in March from Rs 8,000 odd levels and quickly rallied towards Rs 10,000. Since then, the price has been trading in sideways with a positive bias.
The stock has been moving along the 21-day exponential moving average (EMA) and is now heading higher. The daily MACD is turning up after flattening thus the stock can be bought at current level and on dips to Rs 10,100 with a stop loss below Rs 9,850 and a target of Rs 11,500 levels.
Tata Steel: Sell | CMP: Rs 519 | Stop loss: Rs 540 | Target: Rs 470 | Return: 9.4%
The stock has been forming lower tops and lower bottoms on the daily charts for the last five months. The stock was finding support around 38.2 percent retracement of the major upswing of Rs 189 to Rs 748 which comes around Rs 533 levels.
In Monday’s session, the breakdown was seen with long bearish candle and above average volumes indicating selling pressure in the stock.
On the daily chart, the price has given a breakout from the Bollinger band with the expansion of band and closed outside lower band suggesting the start of a fresh trend in the direction of the breakout.
MACD line has a negative crossover with its average below the neutral level of zero on the daily chart. Thus, the stock can be sold at current level and on rise to Rs 525 with a stop loss above Rs 540 and a target of Rs 470 levels.
Wockhardt: Sell| CMP: Rs 593 | Stop loss: Rs 615 | Target: Rs 540 | Return: 9%
The stock has been trading in a range of Rs 620 to Rs 700 levels for the last couple months. After a failed attempt on the upside, the stock witnessed a breakout on the downside with a long bearish candle and above average volumes indicating selling pressure in the stock.
The ADX line indicator of strength has started to move higher from the neutral level of 20 indicating strength in the downtrend.
The MACD line has also given a negative crossover with its average below neutral level of zero on the daily chart. Thus, the stock can be sold at current level and on the rise towards Rs 600 with a stop loss above Rs 615 and a target of Rs 540 levels.
Disclaimer: The author is Head Technical and Derivatives, Sanctum Wealth Management. 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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