Shabbir Kayyumi
Benchmark Index failed to hold its gains above 50 DMA, as Nifty consolidated in a tight range of 9,200-8,800 throughout the last week. The index has formed a bearish candlestick pattern on the weekly time frame suggesting selling pressure on the higher side. Important support is in the region of 8,750-8,650 levels which is a prior swing low. Currently, daily average true range, ATR 10 SMA is around 200 and it is been observed historically that 150-200 is a range of relative lower ATR and supports consolidation indicating a higher probability of sideways movement. Upside momentum will come only above 9,200.
Furthermore, Nifty has given bullish crossover of 20 DMA and 50 DMA in the last week suggesting bullish movement in mid-term; however confirmation will come only above 9,200 mark which can take prices higher towards previous swing high placed at 9,550 mark. On the lower side, crucial support of an unfilled gap lies around 8,750 and any decisive move below this zone will trigger fresh selling which can push Nifty towards 8,300 mark.
Bank Nifty traded lower throughout the last week and closed below crucial supports indicating bears in action. Bank Nifty is showing more weakness than Nifty on the price chart. Moreover, a decisive price action above 18,000 will give an early sign of trend reversal till then bearish bias can continue. Though technically some banking stocks are showing a sign of a reversal in their individual chart set up and if those banks start rising then bank nifty may see an early reversal.
Here is the list of three stocks which could give 13-21 percent return in short term:
ICICI Bank: Buy Around Rs 280 | Target: Rs 340 | Stop Loss: Rs 240 | Upside: 21 percent
Stock can form a double bottom price pattern on the daily chart if it defends its major support line, which should resolve on the upside after its brief consolidation. The momentum oscillator RSI is in positive territory and entering into a trending phase. The MACD too indicates good momentum-trend follow-through. We recommend buy ICICI Bank around Rs 280 with a stop loss of Rs 240 and a target price of Rs 340.
TVS Motor Company: Buy Around Rs 305 | Target: Rs 350 | Stop Loss: Rs 280 | Upside: 14 percent
The daily chart of stock reveals that demand is increasing and supply is diminishing as stock is taking support from line of parity showing a rebound from its lower levels. Prices took support from the rising trend line suggests the possibility of a pullback. With the chart looking attractive and decent volume participation witnessed, we recommend a buy around Rs 305 in this stock for an upside target of Rs 350, keep a stop loss of Rs 280 on a closing basis.
Kotak Mahindra Bank: Buy Around Rs 1,145 | Target: Rs 1,300 | Stop Loss: Rs 1,050 | Upside: 13 percent
The stock witnessed sustained sell-off over the past few days, however, the strong demand zone around Rs 1,115-1,125 zone which has emerged as the support for the same. On the weekly chart, line of polarity suggests strong base and until this break decisively. Formation of the double bottom on the daily chart indicates the consistency of positive rhythm in the stock. We expect the stock can perform going ahead and recommend buying in stock around Rs 1,145 with a stop loss of Rs 1,050 for the target of Rs 1,300.
The author is Head of Technical Research at Narnolia Financial Advisors.
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