The Nifty index has taken resistance from 10,650 zone and closed a day with the minimal loss of 11 points on Wednesday. On the intraday chart, the index is trading in an overbought zone with negative divergence making a cautious view on the index for near term.
Technically, Nifty formed a ‘Hanging Man’ kind of candlestick pattern after Wednesday session which is considered being a trend reversal candle.
On the hourly chart frame, the index is trading in negative divergence that’s only making a cautious view on Nifty for near-term but overall it is a buy on dip market for short to medium term.
On the options front, the highest open interest has now shifted to 10500 PE which was previously at 10,400 PE so 10,500 becomes a strong support for January month followed by 10400 PE and on the higher side, 10,700 CE has highest open interest followed by 11K CE which will act as a strong immediate hurdle in January month.
We expect the index to trade in a tight range of 10,500 to 10,700 in the month of Jan as derivative data suggest. Traders can use buy on dip & sell on rising strategy because market made a strong range of 10,500-10,700 and we may get final direction if the market is able to break on either side.
Here is a list of three stocks which can give up to 13% return in short term:
PVR: Buy | Target: Rs 1,600 | Stop loss: Rs 1,370| Upside :9%
The stock formed a base near Rs 1,280 levels after correcting from the previous high of Rs 1,650 and we have also seen a good pullback from Rs 1,280 which suggest strong support is formed near Rs 1,280 levels.
On the daily charts, the stock broke its Cup and Handle pattern with good volume which is bullish in nature suggest stock ready to trade higher. The stock overcame all the strong DMA’s like 200-100-50 that shows strength is back in stock.
The momentum traders can take a position in the counter at current levels to any dip near Rs 1,420 for the targets of Rs 1,520-1,600 stop out levels can be kept below Rs 1,370 on a closing basis.
JM Financial: Buy | Target: Rs 185 | Stop loss: Rs 148 | Upside 13%
The stock is trading in a strong uptrend since long and recent correction from the top can be considered as a healthy correction. The stock has taken support at 68.20 percent retracement zone from April low.
After consolidating at strong support for nearly two months, the stock has given a small breakout above the range with good volume which suggests stock is all set to continue its overall uptrend soon.
Also, momentum indicator such as RSI is currently reading at 62 which is again a bullish zone.
Traders can initiate a long call on stock at current levels to any dip near Rs 158 for the target of Rs 185. A stop loss can be placed below Rs 148 on a closing basis.
Dewan Housing Finance: Buy | Target: Rs 680| Stop loss: Rs 570| Upside 11%
The stock is trading in a super uptrend and the current chart structure suggest that the stock is ready to continue its uptrend as we have seen a small range breakout last week.
The stock corrected from Rs 679 levels and took a halt at 61.8 percent retracement support. It moved in a consolidation phase, and the current breakout from consolidation with good volume suggest the near-term bottom is formed.
Considering technical setup, one can initiate buy call on the stock at current levels to any dip near Rs 600 for the target of Rs 680 with a stop loss below Rs 570 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.