Ashish Chaturmohta
The Nifty got off to a positive start on Monday, gaining 0.92 percent to close at 10,716 levels. The index witnessed buying throughout the day to close at the day’s highs and formed a bullish candlestick on the daily chart. In the last three sessions, the Nifty took support at 10,600 levels on declines and bounced back from those levels.
The Relative Strength Index (RSI) has given a positive crossover, suggesting resumption of the uptrend. On the upside, immediate resistance is seen at 10,785 levels which was its recent high. If the index manages to sustain above 10,785 levels, it is likely to rally towards 10,910-10,950 levels. On the downside, immediate support is seen at 10,600 levels.
If the Nifty breaks below 10,600, its next support is seen at 10,500 levels. On the options front, maximum put open interest is seen at 10,500, followed by 10,600, suggesting a support zone for the market. In calls, 11,000 has seen the highest open interest followed by the 10,800 strike price. India VIX after a small consolidation around 12 levels has seen a steady rise to 13.76. It is likely to rise further ahead of the Karnataka state elections on May 12.
Here is a list of top five stocks that could deliver up to 16% return in the short-term:
Bombay Dyeing & Manufacturing Company Limited: Buy| CMP: Rs 310| Stop loss: Rs 294: Target: Rs 360| Return 16%
The stock touched a high of Rs 305 in the month of January this year and then corrected down to Rs 177 levels. Since then the price has formed a basing pattern and witnessed breakout from same.
The stock has seen good volumes on every up move indicating buying participation in the stock. Post the breakout, the price has seen throwback i.e., it has tested the breakout level and again hit a new all-time high of Rs 319 on Monday.
The weekly MACD has given positive crossover with its average after 14-weeks above neutral level of zero suggesting consolidation phase is over and the stock has resumed its uptrend.
Thus, the stock can be bought at current levels and on dips to Rs 305 with a stop loss below Rs 294 for a target of Rs 360 levels.
Indian Hotels Company Limited: Buy| CMP: Rs 145| Stop loss: Rs 137| Target: Rs 170| Return
On the long-term monthly charts, the stock has W-shaped bottoming pattern between Rs 135 and 30 odd levels over a period of the last ten years.
In the month of January, price breakout was seen from the pattern to touch all-time of Rs 161 levels. The stock then corrected down to Rs 124 and has rallied to current levels.
Recent, rally and breakout from the long-term pattern were on high volumes suggesting buying participation in the stock.
Also, the last couple of weeks of correction was on below-average volumes. Thus, the stock can be bought at current levels and on dips to Rs 142 with a stop loss below Rs 137 for a target of Rs 170 levels.
Pfizer Limited: Buy| CMP: Rs 2,500| Stop loss: Rs 2,370| Target: Rs 2,800| Return 12%
The stock witnessed a sharp decline from Rs 2,724 levels in September 2015 to low of Rs 1,610 in March 2016. The stock formed a long-term rectangle base between Rs 1,610 and Rs 2,035 odd levels.
In January, it witnessed a breakout from the base on high volumes to touch an all-time high of Rs 2,370 levels. The price then corrected to test breakout and rallied back to hit a high of Rs 2,535 on Monday.
The stock has given a breakout from the short-term rounding base formation of the last three months with strong price momentum and high volumes.
The price has also given a breakout from the Bollinger bands with the expansion of bands suggesting that the trend is likely to continue in the direction of the breakout.
Thus, the stock can be bought at current levels and on dips to Rs 2,450 with a stop loss below Rs 2,370 and a target of Rs 2,800 levels.
Crompton Greaves Consumer Electricals Limited: Buy| CMP: Rs 250| Stop loss: Rs 235| Target Rs 280-290| Return 16%
The stock touched an all-time high of Rs 295 in the month of January and then corrected down to Rs 217 levels. For the last three months, the price has been moving in a sideways range of Rs 245 to Rs 217 levels.
Volumes have been above average during this consolidation which suggests accumulation at lower levels. The stock has given a breakout from this short-term base on above average volumes.
The stock has closed above its long-term 200-day moving average on Monday. The price has also given a breakout from Bollinger bands with the expansion of bands suggesting that the trend is likely to continue in the direction of the breakout.
Thus, the stock can be bought at current levels and on dips to Rs 800 with a stop loss below Rs 780 for a target of Rs 280-290 levels.
Divis Laboratories Limited: Buy| CMP: Rs 1,208| Stop loss: Rs 1,160| Target: Rs 1,350| Return 11%
The stock touched an all-time high of Rs 1,382 in the month of August 2016 and then witnessed a sharp fall towards Rs 533 levels.
Since then, the stock has seen a U-shaped recovery forming higher tops and higher bottoms on the weekly charts. The price has crossed 78.6% retracement of the whole fall from Rs 1,382 to Rs 533 and closed above it.
For the last couple of weeks, the price has been consolidating at higher levels and likely to see a breakout on the upside. Thus, the stock can be bought at current levels and on dips to Rs 1,190 with a stop loss below Rs 1,160 and a target of Rs 1,350 levels.
Disclaimer: The author is Head Technical and Derivatives, Sanctum Wealth Management. 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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