Ashish Chaturmohta
The Nifty was in bear grip from the word go as frontline stocks faced pressure through the day on April 1. The Nifty closed at 8,254, down by 4 percent for the day. Broader market indices BSE Midcap and Smallcap outperformed the benchmarks, with a loss of 2.18 percent and 1.06 percent, respectively. Though the major indices were in negative, market breadth on NSE was slightly in favour of advances.
For the day, the index formed a Bearish Belt Hold line on the daily chart. The bounce-back rally faced resistance at 9,000. Now it has closed at support of 8,250, trading below it, decline towards 7,950 and then 7,500 levels. Immediate level is seen at 8,750 and then 9,000 levels.
On the upside, immediate resistance is seen at 8,700 and then 9,000. Overall, the Nifty is likely to trade in a broader range of 7,500 and 9,000 levels before the next directional move.
In Nifty April monthly expiry options, maximum open interest for Put is seen at strike price 8,000 followed by 7,500 and 7,000; while for Call maximum open interest is seen at 9,000 followed by 10,000. Nifty options distribution data is suggesting a wide range of 7,500 and 9,000 for now.
India VIX index, a measure of volatility, after touching 11-year high of 86.6 has seen some cooling off and is at 60 levels. VIX needs to move below 50 for some stability to return to the market, otherwise expect volatile moves to continue.
Here is the list of stock recommendations for 1-3 months time-frame:
ICICI Lombard General Insurance: Buy | CMP: Rs 1,106 | Stop loss: Rs 1,050 | Target: Rs 1,280 | Return: 16 percent
The stock has seen major decline from all-time high of Rs 1,440 in December to recent of Rs 805. The stock has taken support around previous lows and seen a bounce back. On the daily chart, the price has formed a short-term bullish inverted head and shoulders pattern between Rs 1,200 and Rs 800-odd levels.
Volumes have also been high, suggesting accumulation in stock at lower levels. Price has moved above 21-day exponential moving average, suggesting short-term trend change. Thus, the stock can be bought at current levels and on dips to Rs 1,085 with stop loss below Rs 1,050 for a target of Rs 1,280.
Abbott India: Buy | CMP: Rs 15,613 | Stop loss: Rs 14,500 | Target: Rs 19,000 | Return: 22 percent
The stock touched a high of Rs 16,499 in February and then corrected to Rs 12,501. Here price has taken support at 100-day moving average. Price has seen bounce back couple of times and is trading above short- term averages. Currently, the stock is at all-time high, indicating bullishness.
Volumes have been high, suggesting buying interest in the stock. Relative strength index has lows above oversold zone and now higher on daily chart. MACD has given positive crossover with its average and moved above equilibrium level of zero on daily chart. Thus, the stock can be bought at current levels and on dips to Rs 15,300 with stop loss below Rs 14,500 for a target of Rs 19,000.
PI Industries: Buy | CMP: Rs 1,195 | Stop loss: Rs 1,135 | Target: Rs 1,375 | Return: 15 percent
The stock touched all-time high of Rs 1,629 in February and declined to Rs 970. Here the stock has taken support at around 61.8 percent Fibonacci retracement of the major rise from Rs 676 to Rs 1,629. The stock has also taken support at 100-week moving average. Subsequently, it has seen bounce back thus respectively support level. Price has formed short-term double bottom on the daily chart between Rs 1,200 and Rs 970 levels i.e. at support. Thus, the stock can be bought at current levels and on dips to Rs 1,175 with stop loss below Rs 1,135 for a target of Rs 1,375.
TVS Motor: Sell | CMP: Rs 279 | Stop loss: Rs 295 | Target: Rs 235 | Return: 16 percent
The stock is in long-term downtrend forming lower top and lower bottom on the weekly chart. It has broken major support zone of Rs 340-320 with high volumes and long body bearish candle, indicating selling pressure. Price has given breakout on downside from Bollinger Band, with expansion of bands on weekly chart indicating continuation of trend in the direction of breakout.
The Average Directional Index (ADX) line, indicator of trend strength has up from equilibrium level of 20 with rising negative directional line on the weekly chart. Thus, the stock can be sold at current levels and on rise to Rs 284 with stop loss above Rs 295 for a target of Rs 235.
Aurobindo Pharma: Sell | CMP: Rs 392 | Stop loss: Rs 416 | Target: Rs 320 | Return: 18 percent
The stock is in major downtrend forming lower top and lower bottom on the weekly chart. The stock has had seen strong bounce back from Rs 389 to Rs 600 odd level. Fresh decline last month has broken low of Rs 389 and touched low of Rs 289. Recent bounce back is facing resistance around previous low area. The rally has been on below average volumes, indicating as relief and larger trend remains down. Price has moved below 21-day exponential moving average. Thus, the stock can be sold at current levels and on the rise to Rs 398 with stop loss above Rs 400 for a target of Rs 320.
The author is Head of Technical and Derivatives at Sanctum Wealth Management.
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