Near-term resistance is at 5-day moving average at 10,792. On the other hand, support will continue near 50-day moving average at 10,646 and only a decisive close below this strong moving average will attract fresh selling, says Shabbir Kayyumi of Narnolia Financial Advisors.
The market is trading rangebound between 100-day moving average placed at 10,900 and 50-day moving average at 10,646. Nifty has traded between these two important moving averages for the last 26 trading sessions.
Nifty, on January 4, formed a white body pin bar candle, indicating a very short-term bottom was placed. However, it needs further confirmation.
Near-term resistance is at 5-day moving average at 10,792. On the other hand, support will continue near 50-day moving average at 10,646 and only a decisive close below this strong moving average will attract fresh selling.
ADX indicator is trading lower around 16 signifying rangebound movement. Addition of almost 1 lakh open interest in Nifty Futures on January 4 suggests long buildup. Also Nifty January future is trading above its volume-weighted average price (VWAP) of 10,745.
On the options front, maximum Open Interest (OI) in Call at 11,000 and maximum OI in Put is at 10,500 suggesting immediate trading of 10,500 and 11,000.
Banking index is trading in rising wedge pattern having lower side support around 26,950 and upper trend line resistance placed near 27,500. Since Bank Nifty is trading above major moving averages, its short-term and mid-term trend is positive and immediate trading range is 27,500-26,950.
Here's a look at the top 5 stocks which can give good returns:
Manappuram Finance: Buy around Rs 94 | Stop loss: Rs 85.90 | Target: Rs 112 | Upside: 19 percent
The scrip is moving in a well defined ascending channel with multiple touch point and appears to have strong support around Rs 86 as it has bounced back a couple of time from the demand line. It also maintained its uptrend on the long-term chart and is trading well above its short and long-term moving averages.The momentum oscillator, RSI is also favouring the price pattern. One can accumulate the stock around 94 for an upside target of Rs 112 and a stop loss
below Rs 85.90.
IDFC Bank: Buy above Rs 44.55 | Stop loss: Rs 41 | Target: Rs 52 | Upside: 17 percent
The scrip spurted from a low of Rs 35 showing pullback on the upside. It marked the high of Rs 44.55 and started consolidating there. This pullback rally and consolidation has taken the form Pole and Flag price pattern from last few days. Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further.
Indicator and oscillator are also showing a conducive scenario in the coming sessions. So based on the mentioned technical structure we expect that price may see momentum on the upside after giving the breakout above Rs 45 and hit our target of Rs 52 with a stop loss below Rs 41.
Rural Electrification Corporation: Buy above Rs 125 | Stop loss: Rs 116 | Target: Rs 144| Upside: 15 percentThe stock has maintained its uptrend on the long-term after bottoming at Rs 98. Bullish crossover is seen in the scrip as 20-DMA has crossed
200-DMA from the downside that indicates an upside move. At the current juncture, the stock has formed a Pole and Flag pattern in the medium term interval and it is waiting for the breakout above the same.
Moreover, a declining histogram of MACD in negative territory suggests buying in the scrip.
Union Bank of India: Buy around Rs 89| Stop loss: Rs 84| Target: Rs 99 | Upside: 11 percent
The stock has been an underperformer throughout 2018 and has been trading in a sloping channel with lower highs and lower lows on the monthly the chart. However, for the past few weeks, supply is looking diminished due to the formation of a long bull candle at lower levels. It has managed to hold above 200-DMA and has given a breakout from its double bottom pattern.
The positive divergence on the daily chart also suggests prices may move further on the upside in the coming weeks. Hence, an investor should accumulate the stock around Rs 89 with a stop loss of Rs 84 for the target of Rs 99.
ICICI Bank: Buy around Rs 362 | Stop loss: Rs 354 | Target: Rs 385 | Upside: 6 percentThe daily chart of ICICI Bank reveals demand is increasing and supply is diminishing. Rising trend line at higher levels is displaying trend
continuity and creates a buying opportunity at the current juncture. As of now, the sustainability of RSI above 9-DMA indicates the possibility of an upside.
Apart from this, positive crossover in MACD signals optimism, suggests an upside move in the counter in coming sessions.The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.