At this juncture, 10640 – 10665 zone is a crucial hurdle for the Nifty and any sustainable move beyond this level will drive Nifty higher towards 10703 – 10736 which coincides with the weekly gap area.
By Aditya Agarwal
The Nifty continued to trade in a narrow range of 10,540-10,630 as several factors restricted the rally. Sharp fall in the USD:INR pair, rise in bond yields and surge in crude oil prices were among the top reasons that kept indices rangebound throughout the week.
The Nifty made several attempts to surpass the crucial resistance of 10,640 levels. However, follow-up buying was clearly missing. On an hourly chart, we can see a complex bearish divergence, whereas the weekly RSI (14) is approaching 60 levels.
At this juncture, 10,640–10,665 zone is crucial hurdle for the Nifty and any sustainable move beyond this level will drive Nifty higher towards 10,703– 10,736 levels which coincides with the weekly gap area.
On the flip side, if the Nifty fails to cross and hold 10,640 levels and slides below 10,563 levels, we may see some correction in our market which could take the index towards 10,450–10,355 levels, respectively.
Short rollovers were seen in cement, capital goods, banking, NBFCs and oil & gas sector and that will keep markets under pressure, whereas sectors like technology, metal, pharma, and FMCG saw long positions getting rolled in May series.
From current levels, we don’t expect a big upmove in Nifty and any rally/short covering move towards 10,700-10,740 levels can be used to exit from long positions and initiate fresh shorts.
On the lower end, the level of 10,500 will act as immediate support for the Nifty, post which it can test 10,350-10,300 levels.
Here is a list of top 3 stocks which could give up to 16% return in the short-term:
Wockhardt: Buy at 795| Target 900| Stop Loss 750| Timeframe 15 to 21 sessions| Return 13%
After consolidating near 200-SMA, the stock saw decent buying interest in the past few trading session. The move was also confirmed by the rising volume activity.
On the weekly chart, despite the sharp fall from 1012, the 9-45 EMA on price is positive and indicates that the current trend is still up.
The weekly RSI (14) indicates that stock is likely to resume its uptrend. We advocate traders to buy Wockhardt at the current level of Rs795 with a price target of Rs900 and a stop loss placed below Rs750.
Maruti Suzuki India Ltd: Sell around 9000| Target 8300| Stop loss 9350|Timeframe 15 to 21 trading sessions| Return 7%
Maruti Suzuki has been under pressure since past few trading sessions as stock resumed its medium-term downtrend. Recently, the stock confirmed its breakdown on daily RSI (14) which doesn’t bode well for bulls.
Also, the daily, as well as the weekly RSI, has a signal shift in a range. Hence, we expect a further correction in this stock and recommend traders to short Maruti around 9000 levels with a price target of 8300. Stop loss should be placed at 9350 on a closing basis.
SAIL: Sell around 77 – 78| Target 63| Stop loss 81.50| Time frame 15 to 21 trading session| Return 16%
Last week, stock rested the neckline drawn from its previous support zone which was broken during early March 2017. In line with expectation, stock witnessed decent sell-off and in that pessimism, sail confirmed its breakdown from down sloping trend line drawn from its recent swing low of Rs67.15.
The said breakdown was confirmed by the daily RSI (14) which support our hypothesis. Hence, we expect the resumption of downtrend in this stock, therefore, advice traders to sell this stock in a range of Rs77 to Rs78 with a price target of Rs63. A stop loss should be placed above Rs81.50.Disclaimer: The author Head Technical Research, Way2Wealth Brokers Pvt. 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.