Nandish Shah
The Nifty ended its three-day losing streak on Monday, gaining nearly 100 points to close above the 10,700 mark. It also managed to close above its five-day simple moving average (SMA) again, which is placed around 10,694 levels.
The index is now trading above its 20- and 200-day daily moving average (DMA). This indicates that the bullish trend for the short- to medium-term is likely to continue. Few oscillators like relative strength index (RSI) and Know Sure Thing (KST) indicator also suggest that the positive trend is likely to continue.
For the last two weeks, the Bank Nifty has been outperforming the Nifty. It has confirmed the higher top and higher bottom formation on the daily chart seen last week. On Monday’s session, the index crossed its previous resistance level placed at 25,780 levels to close at a two-month high, indicating that the bullish trend will continue.
Banking/finance stocks have an over 40 percent weightage in the Nifty, which augurs well for it in coming days. On the derivatives front, long positions have been built in the Nifty and Bank Nifty futures’ on Monday. Foreign institutional investors (FIIs) have also created long positions in index futures during the last week.
The Put-Call ratio (PCR) rose sharply to 1.55 from 1.49 levels on the back of aggressive Put writing at 10,600 levels, which suggests the Nifty could find strong support around 10,600 levels.
On the higher side, calls have been written at 11,000 levels and maximum open interest is also placed on the same strike price, which will act as crucial resistance for the index.
We advise accumulation of long positions in the Nifty with a stop loss of 10,600 and a target of 10,950.
Here is a list of top three stock which could deliver up to 11% return in the short-term.
Tata Global Beverage Ltd: Buy| Target: Rs 315 | Stop loss: Rs 278 | Return 7%
The stock which witnessed some correction from its three-month high recorded in April managed to reverse its short-term trend again by closing above its 5-days SMA on Monday which is currently placed at Rs 291 level.
The stock price has already given a bullish trendline breakout by closing above the downward sloping trendline, adjoining the highs of 15-January 2018 and 09 April 2018 suggesting bullish trend.
The stock price is trading above its 20, 50, 100 and 200-SMA, which indicates bullish setup for the medium to long-term. The momentum indicators and Oscillators are also showing strength in the stock.
FMCG as a sector is also doing well. Therefore, we recommend buying Tata Global at CMP of Rs 294 for the upside target of 315 and keep a stop loss placed below Rs 278.
Camlin Fine Sciences: Buy| Target: Rs 128 | Stop loss: Rs 108 | Return 11%
Camlin Fine Science has given a bullish trendline breakout on the daily chart with higher volumes by closing above the downward sloping trendline adjoining the highs of 05 January 2018 and 12 April 2018.
After forming multiple bottoms in April around Rs 103 - 105 level, the stock price reversed northwards to close above its 5 and 20-DMA with higher volumes.
Oscillators like RSI and KST are showing strength in the stock in the short to medium-term. Therefore, we recommend investors to buy Camlin Fine Sciences for the upside target of Rs 128 and keep a stop loss below Rs 108.
DCB Bank: Buy| Target: Rs 206 | Stop loss: Rs 198 | Return 5%
The stock price is on the verge of giving a bullish flag pattern breakout on the daily charts. The trend of the last few days, where price is rising with higher volumes and subdued volumes during the consolidation indicate strength in the uptrend.
The short-term moving averages are trading above its long-term moving averages which indicates a bullish trend.
Private Banks along with Bank Nifty is doing well for the last few days. Therefore, we recommend buying DCB Bank for the upside target of 206 and keep a stop loss below Rs 198.
Disclaimer: The author is Technical & Derivatives Analyst at HDFC Securities. 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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