The Nifty50 remained volatile throughout the week and closed with losses of 0.4 percent for the week ended 8 September at 9,934. The index closed above its crucial short term moving averages such as 5-day exponential moving average (DEMA), 10-DEMA, 20-DEMA, and 13-DEMA which is a positive sign for the bulls.
It was a week of consolidation as Nifty moved in a narrow range of just 50 points, which is really a tiresome thing for the traders preferring index specific trades.
The week concluded with neutral bias by defending the 9,900 mark convincingly and made a ‘Hanging Man’ kind of pattern on the daily candlestick charts keeping both bulls and the bears perplexed moving to the next week.
“Looking at such price activity, it appears that markets are awaiting some trigger to confirm the clear direction in the near term. Technically speaking, the way index has narrowed down its trading range, it’s a sign that the volatility would increase soon; resulting into a probable breakout in either direction,” Sameet Chavan, Chief Analyst- Technical and Derivatives, Angel Broking told Moneycontrol.
“If we have to guess any one direction, we would certainly go with our recent cautious stance on the market. One of the notable observations to support this view is the negative placement of ‘RSI-Smoothened’ on the weekly chart,” he said.
Chavan added that one must understand the fact, it’s very difficult to time such predictions and hence, at present, one should keep tracking key levels for the index i.e. 10,000 and 9,860.
Trades can keep focusing on individual stocks that are providing better trading opportunities. It would be a prudent strategy to stay light once index reaches the higher end of the range and should ideally be prepared with a proper exit strategy.
Here is a list of top five stocks which can give up to 14% return in short term:
ICICI Prudential Life Insurance: BUY| Target Rs469| Stop Loss Rs422| Time 14-21 sessions| Return 7.3%
We witnessed a good price appreciation in this stock immediately post its inception. However, the counter slipped into a consolidation mode after posting a new high of 505.79 in the month of July.
The stock spent some time around Rs420 – 425 as the key short term moving average (89) provided a solid support in the recent correction. During the penultimate week, we witnessed a good positive traction along with tremendous buying interest in the stock.
Considering the ‘u-turn’ in daily ‘RSI-Smoothened’, we expect the stock prices to resume its higher degree uptrend. Hence, we recommend buying this stock at current levels for a target of Rs.469 over the next 14 – 21 sessions. The stop loss now should be fixed at Rs.422.
Radico Khaitan: BUY| Target Rs190| Stop Loss Rs162| Time 14-21 sessions| Return 8.5%
We have been quite upbeat on this stock ever since it has broken out from the previous hurdle of 136 with substantial volumes. Since then it’s been giving series of breakouts after every consolidation.
Similarly, on Friday too, we witnessed yet another breakout from the near-term congestion zone along with sizable volumes; indicating renewed buying interest in the counter.
The said price development in technical terms can be called as a breakout from the ‘Bullish Flag’ pattern. Hence, we recommend buying this stock on declines around 172 for a target of Rs.190 over the next 14 – 21 sessions. The stop loss should be fixed at Rs.162.
Granules India Ltd: SELL| Target Rs116| Stop Loss Rs129| Time 5-10 sessions| Return 6%
We have been closely tracking this stock since last three weeks. Post recent smart recovery from 101, the stock prices slipped into a consolidation mode and within this, every attempt to surpass the 130 mark was getting sold into.
Finally, the stock had to surrender to recent selling pressure and as a result, we saw pessimism getting aggravated after sneaking below the recent support of 126.50 on Friday.
This indicates weakness to continue in coming days as well. We recommend selling this stock on minor bounce around Rs125 for a target of Rs.116 over the next 5 – 10 sessions. The stop loss should be fixed at Rs.129.
Brokerage: SMC Capital
Capital First: BUY| Target Rs860| Stop Loss Rs710| Time 1-2 months| Return 12%
The stock closed at Rs769.95 on 8th September 2017. It made a 52-week low at Rs465 on 22nd November 2016 and a 52-week high of Rs814 on 10th May 2017.
The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at 680. The stock has been trading in rising channel on weekly charts and maintaining its uptrend.
Moreover, it has made a “Symmetrical Triangle” formation in Bull Run, which is traded as continuation pattern and this week closing suggests that there is more upside possibility in prices moving forward.
Therefore, one can buy the stock in the range of Rs760-770 levels for the upside target of Rs850-860 levels with a stop loss below Rs710.
Exide Industries: BUY| Target Rs250| Stop Loss Rs205| Time 1-2 months| Return 14%
The stock closed at Rs219.65 on 8th September 2017. It made a 52-week low at 168.45 on 15th November 2016 and a 52-week high of Rs250 on 11th May 2017.
The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at 206.61. The stock has formed the “Bullish Flag” formation on weekly charts and given breakout above the falling trend line.
This formation is traded as continuation pattern. The positive divergence in secondary indicators like RSI and stochastic are also supporting the next up move in coming sessions.
Therefore, one can buy in the range of Rs215-220 levels for the upside target of Rs240-250 levels with a stop loss below Rs205.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their 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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