After trading above the psychologically important level of 12,000, the Nifty got pushed lower towards 11,700 on account of profit-booking last week. The index has continued to form flat bottom Heikin-Ashi in the weekly timeframe, indicating that bullish bias remains intact and one can opt for buy-on-dip strategy till it trades above 5-weekly DMA standing at around 11,500.
The index has given bullish crossover as 100-DMA crossed 200-DMA from below, signaling that strong bullish momentum will continue in the mid term. Also, MACD bullish crossover and both lines trading above 0 indicate markets are in the hand of the bulls and any correction should be healthy from the mid-term perspective.
Breakout and an expanding Bollinger Band on the daily time frame also suggest that the original trend will resume after the conclusion of retracement towards 20 DMA (11,500). Also, the timeline of polarity stands near 11,550.
Here is the list of three stocks recommendations for the short term:
Bata India: Buy Around Rs 1,370 | Target: Rs 1,470 | Stop Loss: Rs 1,325 | Upside: 7 percent
This counter appears to be consolidating in a larger band of Rs 1,380–1,330 for the last few weeks. Hence, dips are getting bought into, hinting at some sort of accumulation at lower levels. We believe once this counter manages a sustainable close above Rs 1,370, it can witness a swift move towards its logical targets placed around Rs 1,470. Therefore, positional traders should buy into this counter at around Rs 1,365-1,375. The stop loss suggested for the trade is a close below Rs 1,325.
Jindal Steel & Power: Buy: Rs 190 | Target: Rs 210 | Stop Loss: Rs 178 | Upside: 10 percent
The short-term correction seems to be over in the stock and bulls are likely to take charge again. The formation of the Bullish Engulfing price pattern on the daily timeframe suggests that the bulls have entered the counter at lower levels. Further, the bullish crossover in RSI & stochastic and 20 DMAs on the daily chart are providing good support, which gives an additional signal that a short-term rally can't be ruled out. Traders can initiate long positions around 190 with a stop loss of Rs 178 and the target of Rs 210.
Cadila Healthcare: Buy Around Rs 430 | Target: Rs 475 | Stop Loss: Rs 410 | Upside: 10 percent
The scrip spurted from a low of Rs 411 and formed a piercing candlestick pattern. It showed pullback on upside marked the high of Rs 432 mark and started consolidating there. It is waiting for the breakout on the upside so that it can accelerate buying momentum further. The emerging line of polarity on the daily chart is suggesting a bullish momentum in the scrip. Indicators and oscillators are also showing a conductive scenario in the coming sessions. Based on the mentioned technical structure, one can go long in the scrip above Rs 432 for the target of Rs 460 & Rs 475 mark with a stop loss of Rs 410 mark.
(Shabbir Kayyumi, Head of Technical Research at Narnolia Financial Advisors 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.
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