For the coming week, Bonanza Portfolio recommends traders to use buy on dip strategy. Any dip near 9,530 level will be a good buying opportunity for the short-term and for existing position.
The Nifty formed a strong technical setup and is on the verge to touch 9,700 levels in coming sessions. Since Nifty has given a double bottom breakout in the start of the year, it is observed that on every breakout Nifty has rallied nearly 150 points.
Further, we have witnessed correction up to breakout zone which reflects pull back rally. Such has been the momentum of the market over a period which is expected to be continuing in the near-term also.
Traders need to be cautious, as the index is trading at all-time highs and need to change strategies. Rather than jumping on fresh breakouts one can better look for a dip.
For the coming week, we recommend traders to use buy on dip strategy. Any dip near 9,530 level will be a good buying opportunity for the short-term and for existing position. We recommend booking profits on the higher side.
Top five Technical picks which can give return up to 16 percent in short-term.
Britannia Industries: BUY | Target Rs3800 | Stop Loss Rs3360 | Upside 8%
The stock was on the radar on traders since the stock has broken its 52-week high in April and currently it is trading near demand zone of Rs3,500.
If we look at the daily chart, the stock is trading in a rising channel pattern by forming higher high and higher low. On Wednesday, the stock has bounced from its lower band of the channel with the rise in volume hinting a move towards upper band of the channel which is at Rs3,800.
On the weekly charts, the stock has taken support from its previous breakout level and rose with sufficient volume. The momentum indicator, relative strength index (RSI) is trading near 58 which is considered as a bullish zone.
We expect prices to bounce from the current levels and one can look to buy the stock for the targets of Rs3,800 and keeping a stop loss below Rs3370 on a closing basis.
Muthoot Finance: BUY| Target Rs 450| Stop Loss Rs 380 | Upside 9%
The stock is in full up the mood and in Wednesday’s session, the stock again has given a range breakout with decent volume hinting that it is ready to touch fresh levels in the coming sessions.
If we study weekly charts, the stock has already given a cup and handle pattern formation in March and showed fresh up move. Now, the stock is forming a bullish flag formation on the weekly chart which already broke on Wednesday session.
Any closing above Rs410 levels will activate pattern. However, on the flipside, the stock has a strong resistance near Rs420 levels, and any closing above Rs420 will unfolds Rs450 targets in the near-term.
Considering, technical setup, traders can go long on stock at current levels to any dip up to Rs400 for a target of Rs450 and maintain a stop loss below Rs380 closing basis.
Jindal Steel & Power: BUY | Target Rs 142 | Stop Loss Rs 107 | Upside 16%
The stock consolidated for more than two years and has given a breakout in February with huge volume suggesting bottom has formed.
In the recent correction, the stock has taken support from the same breakout level and rose quickly which means participants are trying to accumulate the stock at lower levels. We have noticed a rise in volume along with prices.
Considering above evidence, Bonanza recommends a buy call on stock at a current price to any decline up to Rs116 levels for the targets of Rs142 and maintain a stop loss below Rs107 on a closing basis.
TATA Communication: BUY| Target Rs 800 | Stop Loss Rs 690 | Upside 10%
In a recent correction, the stock has corrected from 770 to 650 and took a pause on its 200-DMA. We have witnessed a quick pull back rally from its 200-DMA with a decent rise in volume.
In the last three trading sessions, stock almost rose 12 percent and we expect momentum to continue. On the daily chart, the stock has given “W” pattern breakout which is a bullish sign for stock and RSI also given a breakout above 52 and currently reading near 65.
For trading perspective, one can initiate a buy on the counter at current levels to any dip near 710 targets of 800 by keeping stop out below 690 levels.
Jamna Auto: BUY| Target Rs 295| Stop Loss Rs 234 | Upside 15%
The stock is in a strong uptrend and in Wednesday’s session, it gave strong breakout and closed near its 52 week high.
On the weekly charts, the stock has formed a Cup and handle pattern which broke on Wednesday session along with good volume and we can see bullish flag formation. On the weekly chart, the stock is all set to unfold its fresh levels.
On the daily chart, we can see the stock has given a quick pull back rally hinting strength will continue. Momentum indicator such as RSI reading near 64 which is again bullish zone.
Bonanza recommends a buy call on stock at the current level or on any correction for the targets of 295 in near term by keeping stop out level at 234 on a closing basis.Disclaimer: The author is Senior Research Analyst, Bonanza Portfolio Ltd. 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.The Great Diwali Discount!
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