Ashish Chaturmohta
Equity markets across the world rallied on trade truce between the US and China. The domestic markets also opened in positive but failed to sustain above 10,900 as GDP and fiscal deficit numbers weighed on the market.
The Nifty finally settled at 10,884 on December 3, marginally higher by 0.06 percent for the day. Market breadth on NSE was slightly in favour of advances.
Broader market indices BSE Midcap and Smallcap were up 0.5 percent each for the day. The index filled falling gap area (10,755-10,847) and retraced 50 percent of the entire fall (11,760-10,005). But after six consecutive sessions of gains, the last couple of candlesticks on daily chart suggests momentum is waning and market could pause the rally.
Thus, if the index starts to trade below 10,835 then expect a test of the 200-day moving average which comes around 10,745. Below this, the next support is seen at 10,650.
On the upside, if it sustains above 10,940, expect a rally towards 11,090 which is 61.8 percent retracement of the current fall.
In Nifty options, maximum open interest for Puts is seen at strike price 10,000 followed by 10,500; for Calls it is seen at strike price 11,000 followed by 11,500. Put writing was seen in 10,500 and 11,000; while Call writing was witnessed in 11,100 and 11,500.
India VIX declined 4.9 percent to 18.22. It continues to consolidate at elevated levels which is a cause of concern. VIX needs to move below 17 for the market to see a sustainable up move.
Here are the top stock trading ideas which can give good returns:
PVR: Buy | CMP: Rs 1,522 | Stop loss: Rs 1,450 | Target: Rs 1,700 | Return: 12 percent
After hitting high of Rs 1,655 in May last year, the stock had been in correction mode. In the last four months, it formed a double bottom on the weekly chart. The stock has given breakout from the pattern after consolidating around breakout level.
Price has moved above the falling resistance trend line connecting highs of Rs 1,655 and Rs 1,568 indicating correction phase is over. It has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on the daily chart.
Relative strength index has given positive crossover with average on the daily chart. Daily MACD line also given positive crossover with its average. Thus, the stock can be bought at the current level and on dips to Rs 1,500 with a stop loss below Rs 1,450 for a target of Rs 1,700.
SRF: Buy | CMP: Rs 2,144 | Stop loss: Rs 2,050 | Target: Rs 2,400 | Return: 12 percent
The stock has formed bullish double bottom pattern on the weekly chart and with higher second low indicating buying coming at higher levels. It has witnessed good volumes at lower levels during formation indicating accumulation at these levels.
Price has crossed 61.8 percent Fibonacci retracement level of the decline from Rs 2,447 to Rs 1,530. Presently, it is trading above the neckline i.e. breakout consolidating above it.
MACD line on the weekly chart is above the equilibrium level of zero and moving higher. Thus, the stock can be bought at the current level and on dips to Rs 2,125 with a stop loss below Rs 2,050 for a target of Rs 2,400.
Colgate Palmolive (India): Buy | CMP: Rs 1,273 | Stop loss: Rs 1,220 | Target: Rs 1,400 | Return: 10 percent
The stock witnessed fall from Rs 1,282 in May to low of Rs 1,018. Since then, the stock has seen smart recovery from s strong support of Rs 1,020 to touch the all-time high in yesterday’s session. It has formed a base between Rs 1,282 and Rs 1,020 which is expected to breakout on the upside.
In the last eight sessions, the stock has rallied on good price momentum and volumes indicating buying participation in the stock. Price has given breakout on upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on daily and weekly charts.
MACD line on the weekly chart is above the equilibrium level of zero and moving higher. Thus, the stock can be bought at the current level and on dips to Rs 1,260 with a stop loss below Rs 1,220 for a target of Rs 1,400.
Berger Paints: Buy | CMP: Rs 323 | Stop loss: Rs 307 | Target: Rs 365 | Return: 13 percent
After an all-time high of Rs 350 in the month of August, the stock corrected to Rs 265. Here, the stock took on at previous highs which acted as support for the stock. Since then the price has recovered more than 61.8 percent Fibonacci retracement of the recent and trading above.
For the last couple of weeks, it has been trading in narrow range consolidating its gains which is likely to see a breakout on the upside. Relative Strength index has given positive crossover with its average on the daily chart. Thus, the stock can be bought at the current level and on dips to Rs 318 with a stop loss below Rs 307 for a target of Rs 365.
Axis Bank: Buy | CMP: Rs 625 | Stop loss: Rs 600 | Target: Rs 700 | Return: 12 percent
The stock has formed symmetrical triangle pattern on the weekly chart and trading in a range of Rs 650 and Rs 350 for more three and half years. On the daily chart, the stock has seen a sharp bounce back from 200-day moving average and price has been consolidating in narrow between Rs 635-600 for last four weeks. Thus, it has formed bullish pole and flag pattern on the daily chart that is expected to give a breakout on the upside.
ADX line indicator of trend strength is steadily moving higher above neutral level of 20 indicating strength in up move. Thus, the stock can be bought at the current level and on dips to Rs 615 with a stop loss below Rs 600 for a target of Rs 700.
The author is Head of Technical and Derivatives at Sanctum Wealth Management.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their 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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