Rohit Singre Bonanza Portfolio
The Nifty50 index closed the day at 10,500.90 with loss of 38.85 after a volatile session on Wednesday and formed a bearish candle pattern on the daily charts.
The index opened the day on Wednesday with the gap-up opening but failed to sustain at higher levels and the last hour selling took the index to days low.
Nifty has formed strong resistance near 10,570-10,640 and a strong support near 10,390-10,270. As long as the Nifty index is trading below 10,640 levels, we may see the index to consolidate in the range of 10,270-10,640 zone.
On the options front, highest open interest is placed at 10500 PE followed by at 10000 PE. The level of 10,000 will act as strong support in the month of February and on the higher side 11,100 CE has highest open interest followed by 11000 CE.
In the recent past, we have witnessed long unwinding along with short built up in Nifty suggesting bears are having control at the moment.
We expect volatility to extend further and one needs to trade on strict levels as it is buy on the dip and sell on rise market for the near term.
Currently, the index has strong resistance at 10,640 so traders can initiate shorts on every rise keeping a stop loss above 10,620 and the immediate support is formed near 10,270. These levels can be used as buying stop loss on the downside.
Here is a list of three stocks which can give up to 12% return in short term:
Can Fin Homes: BUY | Target Rs 580 | Stop Loss Rs 465| Upside 12%
After a strong rally, the stock showed a healthy correction which halted at 61.8% retracement support from its previous low of 251. The recent rise from 61.8% retracement zone is likely to extend further because we have seen substantial volume activity on the chart.
On the daily and weekly charts, we have witnessed a strong positive divergence. The rise in price along with the rise in volumes suggest that the stock has formed a near-term bottom and can move towards 580 levels.
The momentum traders can take the position in the counter at current levels to any dip near 480 for the target of 580 and a stop out levels can be kept below 465 on a closing basis.
Narayana Hrudayalaya: BUY | Target Rs 344 | Stop Loss Rs 280 | Upside 12%
The stock is trading in a falling channel pattern forming lower lows and lower highs but recently the stock has given strong breakout above the falling channel with decent volumes hinting that the stock is ready to move high from the current levels.
The stock has also formed a positive divergence on the daily and weekly charts. On the daily chart, the stock has given a double bottom breakout with good volumes that suggest it is going to change its overall downtrend to an uptrend.
Traders can initiate a long call on the stock at current levels to any dip near Rs300 for the target of Rs344. A stop loss can be kept below 280 on a closing basis.
Eicher Motors: BUY | Target Rs 30900| Stop Loss 26100| Upside 10%
The stock is trading in a long rising channel pattern on the weekly charts and the stock has corrected recently from a higher band of the channel.
Currently, the stock is hovering near the lower band of the channel and we have witnessed strong buying activity on lower levels.
Also stock has formed a bullish AB=CD pattern on the daily chart and also stock is trading in positive divergence on the daily chart which suggests the near-term bottom is formed and the stock is all set to fly northwards.
Considering technical setup one can initiate buy call on the stock at current levels to any dip near 27500 for the target of 29900-30900 with a stop loss below 26100 on a closing basis.
Disclaimer: The author is Senior Research Analyst, Bonanza Portfolio Ltd. The views and investment tips expressed by investment expert on Moneycontrol.com are his 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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