A spate of corrections sweeping through global markets after worries intensified in the US banking space weighed on the Indian equity markets on March 10, driving the Nifty50 down 1 percent on Friday as well as in the entire last week.
The index managed to defend not only 17,300 but also the 17,400 levels, and closed at 17,413 on Friday, the lowest closing level since March 2. There was formation of a bearish candlestick pattern which somewhat resembles a bearish engulfing pattern on the weekly timeframe, indicating the possibility of weakness going ahead, though there was a hammer kind of pattern formation on the daily scale on Friday, which is generally a bullish reversal pattern.
The 17,300 level is expected to act as a crucial support, followed by the recent swing low of 17,250 and if the said levels get broken, then there could be correction up to the 17,000 mark, whereas on the higher side, 17,600-17,700 could be critical hurdles for further up-move towards the psychological 18,000 mark, experts said.
"Friday's low around 17,320 would be seen as an immediate support followed by sacrosanct support at February's swing low of 17,250. On the flip side, the bearish gap left around 17,570–17,600 should be considered an immediate hurdle," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One, said.
Instead of swaying on both sides of the trend, he advised that traders should ideally prefer staying light on positions and keep accumulating quality propositions in a staggered manner.
The weak global cues and underperforming heavyweights, especially Reliance Industries, were major culprits in dragging the markets down. Going ahead, it would be crucial to keep a close tab on them as any positive development globally can elevate the overall sentiment, Sameet Chavan said.
Ajit Mishra, VP - Technical Research at Religare Broking said that while most of the sectors are trading in line with the benchmark, the performance of banking and financials would continue to play a key role in deciding the next directional move. Stay focused on stock selection and risk management, he advised.
Let's take a look at the top 10 trading ideas by experts for the next three-four weeks. Returns are based on the March 10 closing prices:
Expert: Viraj Vyas, Technical & Derivatives Analyst - Institutional Equity at Ashika Stock Broking
Linde India: Buy | LTP: Rs 4,015 | Stop-Loss: Rs 3,800 | Target: Rs 4,450 | Return: 11 percent
The stock has been forming an ascending triangle pattern since April last year and broke out with volumes in the last few sessions. Post the strong breakout, the stock opened gap up and despite ongoing volatility, the stock continues to sustain higher which indicates buyer Strength.
Post such an extended consolidation breakout, the stock appears to have a price objective of atleast of 1,000 rupees rally from the breakout level which provides a favourable risk-reward opportunity.
GAIL India: Buy | LTP: Rs 111 | Stop-Loss: Rs 103 | Target: Rs 125 | Return: 13 percent
The oil and gas space is a sector which has been in a broader consolidation since almost 2 years with bouts of strengths and weakness.
Looking at weekly chart, the stock has closed at the higher threshold of the consolidation of almost 2 years. The breakout was assisted with strong volumes and such breakout after elongated consolidation usually results in sharp up move.
NCC: Buy | LTP: Rs 99 | Stop-Loss: Rs 90 | Target: Rs 120 | Return: 21 percent
The weekly chart of the strong depicts a Cup and Handle pattern formed over a period of around 4 years which depicts massive accumulation.
The stock has also closed above the previous swing high (Rs 95-level) which indicates seller exhaustion. The stock broke above the neckline last week with above average volume and continues to be resilient in turbulent market which depicts buyer strength.
Expert: Shrikant Chouhan, Head of Equity research (Retail) at Kotak Securities
Persistent Systems: Sell | LTP: Rs 4,749 | Stop-Loss: Rs 5,000 | Target: Rs 4,400 | Return: 7 percent
The stock is diverging negatively on the daily charts. During the pullback trend, the stock managed to surpass its previous peak, however, the key oscillators failed to gain momentum. Such a type of formation invites correction.
The strategy should be to sell at the current level of Rs 4,750 and the rest at Rs 4,900. For that put the stop-loss at Rs 5,000. On the downside, the stock may slide towards Rs 4,500 & Rs 4,400 levels.
ICICI Bank: Sell | LTP: Rs 843 | Stop-Loss: Rs 855 | Target: Rs 800 | Return: percent
The stock is forming an ascending triangle, which is a bullish consolidation for the stock, however, it has broken its support due to sudden weakness in the market. It is suggesting a correction in the near term.
In such cases most of the time the stock falls to the starting point of the formation which is at Rs 800. The stock may fall down 5 percent from the current levels, which is a decent downside. Sell is recommended at current levels and above Rs 850. For this, keep the stop-loss at Rs 855.
Tata Steel: Buy | LTP: Rs 108 | Stop-Loss: Rs 100 | Target: Rs 125 | Return: 16 percent
It is making a higher bottom at Rs 103.50 as compared to Rs 100, which was its previous low. The entire basket of steel stocks reversed sharply in the past week.
In fact, for the past two weeks, the stock has been facing buying pressure whenever it has declined. It is relatively outperforming other sectors and also stocks from the metal baskets.
A buy is recommended at current levels and at Rs 104. For that, keep a stop-loss at Rs 100. On the upside, it has the potential to move higher towards Rs 115 or Rs 125 in the medium term.
Expert: Nagaraj Shetti, Technical & Derivative Analyst at HDFC Securities
RBL Bank March Future: Sell | LTP: Rs 155.10 | Stop-Loss: Rs 165 | Target: Rs 143 | Return: 8 percent
After witnessing a sharp weakness in January month, the stock price has shifted into a broader high low range movement within Rs 170-150 levels. Presently, the stock price is placed at the edge of breaking below the crucial lower support at Rs 150 levels-weekly 20-period EMA (exponential moving average).
The overall chart pattern indicates a formation of important top at Rs 189 in January month and there is a higher chance of further weakness emerging in coming week.
Volume has started to expand during downside breakout in the stock price and weekly 14 period RSI (relative strength index) shows negative indication. Hence, one may expect further strengthening of downside momentum in the stock price ahead.
One may look to create short position in RBL Bank March Future at CMP (Rs 155.10), add more on rise up to Rs 161, wait for the downside target of Rs 143 in the next 2 weeks. Place a stop-loss of Rs 165.
Oracle Financial Services Software: Buy | LTP: Rs 3,242 | Stop-Loss: Rs 3,025 | Target: Rs 3,480 | Return: 7 percent
The attached weekly timeframe chart of the IT stock - Oracle Financial Services Software (OFSS) indicates a sustainable upside bounce in the last few weeks.
We observe a formation broader triangle pattern (converging up and down trend lines), which is unfolding over the last few months.
The stock price is now in an attempt of upside breakout of the triangle at Rs 3,230-3,250 levels. Hence, a sustainable move above this hurdle is expected to bring strong upside momentum for the stock price ahead.
The negative chart pattern like lower tops and bottoms (during November 21 to October 22) seems to have been completed as per weekly chart and the stock price has started to move up as per the positive pattern like higher tops and bottoms recently. This is positive indication.
One may look to buy OFSS at CMP (Rs 3,245), add more on dips down to Rs 3,120 and wait for the upside target of Rs 3,480 in the next 3-5 weeks. Place a stop-loss of Rs 3,025.
Expert: Ruchit Jain, Lead Research at 5paisa.com
Hindustan Petroleum Corporation: Buy | LTP: Rs 230 | Stop-Loss: Rs 222 | Target: Rs 244 | Return: 6 percent
The stock witnessed a buying interest in the week gone by and showed a relative outperformance in last couple of sessions inspite of selling pressure seen in the broader markets.
The RSI oscillator has given a positive crossover indicating a positive momentum while the prices have also surpassed its ’20 DEMA’ hurdle.
We expect the momentum to continue in the near term and hence, traders can buy the stock in the range of Rs 227-230 for potential short term targets of Rs 238 and Rs 244. The stop-loss on long positions should be placed below Rs 222.
Polycab India: Sell | LTP: Rs 2,947 | Stop-Loss: Rs 3,050 | Target: Rs 2,840 | Return: Rs 4 percent
The stock has seen a decent upmove in last couple of months and the momentum readings were in the overbought zone. In Friday's session, the prices breached its ‘20 DEMA’ support and the RSI oscillator also gave a negative crossover.
The volumes were also relatively good along with the price correction and hence, the stock could see further correction in the short term.
Traders are advised to sell the stock on pullback moves around Rs 2,980-3,000 for potential near term targets of Rs 2,900 and Rs 2,840. The stop-loss for short positions should be placed above Rs 3,050.
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