Ashish Chaturmohta
Growing concerns over coronavirus spread continue to batter financial markets across the world. Though the Nifty saw a brief intraday bounce back, it quickly got sold into and the market ended lower for the fourth consecutive day on February 26.
The Nifty50 finally settled at 11,678, down by 1 percent for the day. The broader markets, BSE Midcap and BSE Smallcap, were down by 1.34 percent and 0.82 percent.
After a gap-down opening, the Nifty found support at 200-Day Moving Average, placed at 11,686, and then bounced back to fill the gap.
But fresh selling took the market lower to close below the long-term average. The post-budget day low of 11,614 is the immediate support for the market.
A break below it will see a continuation of decline, initially towards 11,490 and then 11,340 levels. On the upside, the Nifty needs to cross the high of February 26 of 11,800 for a bounce-back towards 12,000.
In the Nifty March monthly expiry options, the maximum open interest for Put is seen at strike price 11,800 followed by 11,700; while for Call, maximum open interest is seen at 12,000 followed by 12,500.
A list of top five stocks that can give 14-16% return in the next 3-4 months:
Varun Beverages Ltd: Buy| LTP: Rs 837| Stop Loss: Rs 795| Target: Rs 965| Upside 15 percent
The stock is in a long-term uptrend forming higher tops and higher bottoms on the weekly chart. In January, the stock touched an all-time high of Rs 870 and since then it has been sideways.
It has been consolidating between 870 and 846 levels to form a symmetrical triangle pattern on the daily chart.
The stock has seen a consolidation above 21-Day Exponential Moving Average. Long-body bullish candles with high volumes during consolidation indicate buying participation in the stock and a breakout is likely to be on the upside.
The Relative Strength Index (RSI) has given a positive crossover, with its average on the daily chart indicating a change of trend towards the upside.
Thus, the stock can be bought at current levels and on dips towards Rs 825 with a stop loss below Rs 795, and a target of Rs 965.
Polycab India Ltd: Buy| LTP: Rs 1,139| Stop Loss: Rs 1,080| Target: Rs 1,320| Upside 15 percent
The stock is in a long-term uptrend, forming higher tops and higher bottoms on the weekly chart. For the last three months, the stock has been largely sideways, with higher highs formation indicating positive bias.
The last four sessions have witnessed an above-average volume at all-time high levels, with positive price action indicating buying participation in the stock.
MACD has given a positive crossover, with its average above equilibrium level of zero on the weekly chart. The relative strength index has given a positive crossover with its average on the daily chart.
Thus, the stock can be bought at current levels and on dips towards Rs 1,125 with a stop loss below Rs 1,080, and a target of Rs 1,320 levels.
Westlife Development Ltd: Buy| LTP: Rs 475| Stop Loss: Rs 450| Target: Rs 550| Upside 15 percent
The stock has seen a major multi-year consolidation between Rs 450 and Rs 160 odd levels on the long-term chart. It witnessed a breakout on the upside at the start of the month on high volumes and hit an all-time high of Rs 499.
Since then, it has consolidated above the breakout level between Rs 486- Rs 445 levels before the next leg of the up move.
On the monthly chart, the price has given a breakout on the upside from the Bollinger Band, with the expansion of bands indicating a continuation of the trend in the direction of the breakout.
The Average Directional Index (ADX) line, an indicator of trend strength, has moved above the equilibrium level of 20 with rising Plus Directional line on the monthly chart.
Thus, the stock can be bought at current levels and on dips towards Rs 457 with a stop loss below Rs 450, and a target of Rs 550 levels.
GAIL (India) Ltd: Sell| LTP: Rs 108| Stop Loss: Rs 114| Target: Rs 90| Downside 16 percent
The stock has been in a downtrend forming a lower top and lower bottom on the weekly chart. The stock had found support 121 level, where 61.8% Fibonacci retracement of the major up move from 73 to 200 levels comes.
After trading around 121 levels for a few months, the stock has again given a fresh breakdown after hitting a 52-week low on February 26.
The price has given a breakout on the downside from the Bollinger Band with the expansion of bands on daily as well as weekly chart indicating continuation of the trend in the direction of the breakout.
MACD has given negative crossover, with its average below equilibrium level of zero on the weekly chart. Thus, the stock can be sold at current levels and on the rise towards Rs 110, with a stop loss above Rs 114, and a target of Rs 90.
Hindalco Industries Ltd: Sell| LTP: Rs 170| Stop Loss: Rs 177| Target: Rs 145| Downside 14 percent
After hitting an all-time of Rs 284 in January 2018, the stock has been in a downtrend, forming a lower top and lower bottom. The stock witnessed a bounce back from Rs 171, where 50% retracement of the major up move from Rs 59 to Rs 284 is seen.
It has seen a reversal from Rs 221 now broken Rs 171 levels with high volumes indicating selling pressure in the stock.
The price has given a breakout on the downside from Bollinger Band, with the expansion of bands on daily as well as a weekly chart indicating a continuation of the trend in the direction of the breakout. MACD has moved below the equilibrium level of zero on the weekly chart.
Thus, the stock can be sold at current levels and on the rise towards Rs 172 with a stop loss above Rs 177, and a target of Rs 145 levels.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)
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