The Nifty can continue trading in the 11,790-12,018 range with a positive bias and a level of 12,180 can be expected if the range breaks on the upside.
The bulls have shown resilience and the Nifty escalated the gains to close above the important 11,900-mark. A gain of more than 160 points has been registered on a week-on-week basis and positive bias was seen throughout the last trading week.
The overall trend is favouring the bulls but they are expected to adopt a cautious stance as the prices are facing important overhead resistance. The rising trend line originated by joining the lows of July 14, 2020, and August 3, 2020, is likely to put supply pressure at a higher level and the 12,180- 12,200 range could act as a stiff resistance zone. The candle with long upper and lower shadow formed on October 21 developed a small-trading range in the 11,800-12,018 zone.
As the momentum indicators in weekly as well as in daily time frame are favouring the bulls, the breakout above the trading zone could strengthen the bulls and prices could be propelled to 12,180. As per the advanced Fibonacci theory, the 38.2 percent projected retracement level (11,790) is likely to act as a support for the coming week. Prices are trading above all major short-term moving averages, which are likely to provide a cushion to the prices on every dip.
To put things into perspective, the Nifty can continue trading in the 11,790-12,018 range, with a positive bias and a level of 12,180 can be expected if the range breaks on an upside. Volatility can't be ruled out as the volatility index (VIX) has started inching up.
Here are three stocks that can fetch 9 to 14 percent return in the short term and are likely to outperform the Nifty:
Jubilant Foodworks: Buy | CMP: Rs 2,220.10 | Target: Rs 2,451 | Stop loss: Rs 2,121 | Return: 10 percent
The stock is in a roaring uptrend and maintaining the cycle of higher top and higher bottom. The momentum indicators in the weekly and monthly time frame are trading in a bullish territory and prices in the daily time-frame are bouncing back from the significant support levels.
The formation of bullish 'Harami' candlestick pattern on the October 23 trading session after a mild retracement suggests that the short-term correction is over and reversal after retracement can be expected in the counter. The support of 50-day exponential moving average is likely to provide a cushion to prices and a bullish reversal pattern in the RSI is providing additional strength to the stock. Traders can initiate buying at the current market price (CMP) for short-term gains.
Balkrishna Industries: Buy | CMP: Rs 1,388.1 | Target: Rs 1,585 | Stop loss: Rs 1,319 | Return: 14 percent
A mild retracement has been witnessed in the stock after a break out of a long-term rounding bottom formation and it is trading near the medium-term moving averages ribbon. The bullish 'Hammer' candlestick pattern near the support level indicates that fall could get abated and a fresh leg of upmove can't be ruled out. The positive crossover in momentum indicators and a bullish price-pattern can result in a decent rally in the coming days. Traders can initiate long positions at CMP and on any decline till Rs 1,350 for the short term.
SRF: Buy | CMP: Rs 4,422.55 | Target: Rs 4,820 | Stop loss: Rs 4,220 | Return: 9 percent
The stock is breaking out of a trading range and seems poised for a short-term upmove. Prices are bouncing back from short-term moving averages ribbon and the RSI is bouncing back from an important support level. The momentum indicators are favouring the bulls and could foster a probable breakout. Traders can enter in the counter through pyramiding where part partial quantity can be bought at CMP and positions can be added once the level of Rs 4,460 is taken out on the higher side.
(Manish Srivastava is Senior Technical Analyst (equity & currency) at Rudra Shares & Stock Brokers Ltd.)Disclaimer: The views and investment tips expressed by 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.