Resistance for the Nifty is placed at 10638 level which is an intermediate top on the daily chart.
By Nandish Shah
During the last week, the Nifty managed to hold above its 200-DMA support, which is currently placed at 10140 odd levels. The 200-DMA support also coincides with the support of the upward sloping trend line adjoining the bottoms of 30th June 2017 and 29th Sep 2017.
Therefore, the significance of 10140 levels as a support is very high. We have seen long build up in the Nifty and Bank Nifty Futures’ during the last session, where Open Interest rose above 2 percent (Prov) and 11 percent (Prov) respectively with Nifty and Bank Nifty rising by 1.9 percent and 1.5 percent respectively.
Moreover, a rise in the Put-Call ratio (PCR) on Monday was backed by aggressive Put writing at 10300-10400 strikes coupled with the foreign institutional investors (FIIs’) buying in the Index Futures’, and Stock Futures’ during the last week which indicates that downside is now limited.
Resistance for the Nifty is placed at 10,638 level which is an intermediate top on the daily chart. Considering the evidence discussed above, our advice would be to go long in the Nifty with the stop loss of 10300 levels and a target of 10600.
Here is a list of top three stocks which could give up to 8% return in the short term:
Sanghi Industries: BUY| Target Rs128 | Stop Loss Rs113 | Return 8%
Sanghi Industries reversed northwards after forming a Double Bottom around Rs105 levels to close above its 5 and 20-days moving average (DMA) with a surge in volumes.
The stock price has also given a trendline breakout by closing above the downward slopping trendline, adjoining the highs of 05-January-2018, 12-Feb-2018, and 27-Feb-2018.
The relative strength index or the RSI has also reached the benchmark level of 50, indicating the sustainability of the trend.
We believe, the recent fall in prices which saw a cut of 18 percent from the all-time high level seems to be a running correction in overall bullish trend.
Therefore, we recommend buying Sanghi Industries for the upside target of Rs128, and a stop loss placed below Rs113.
Chambal Fertilisers: BUY| Target Rs173 | Stop Loss Rs 150| Return 8.80%
On 26th Feb 2018, the stock registered a new 52-week and all-time high with a jump in volumes. The stock price has formed multiple bottoms at the similar level of 150 in the last 1-month.
On 12th March, the stock resumed its uptrend by rising more than 3 percent with fair volumes. The stock price currently placed above 20, 50, 100 and 200 DMA, indicating bullishness on all time frames.
The stock is one of the few fertilizer stocks, which is hovering around its all-time high. Oscillators like MACD, KST, and ADX are showing strength on weekly and monthly charts.
The level of 150 seems to have become the floor for the short term trend and recent correction from all-time high seems to be an opportunity for traders to initiate fresh longs. We recommend buying Chambal Fertilizer for the upside target of Rs173, and a stop loss to be placed below Rs150.
Kotak Mahindra Bank: BUY| Target Rs1155 | Stop Loss Rs1070 | Return 6%
The stock price has given a bullish flag pattern breakout on the daily chart on Monday where it closes at a nine-day high. The stock has been holding well in the recent correction and also holds a bullish trend on the monthly chart.
The stock price is trading above its 20, 50, 100 and 200 DMA, which indicates bullish setup for the medium to long-term.
Oscillators and momentum indicators are showing strength on the medium-term chart. We believe the stock price is all set to cross all-time high level of 1131 level. Therefore, we recommend buying Kotak Mahindra Bank for the upside target of 1155, and a stop loss placed below Rs1070.Disclaimer: The author is PCG Desk, 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.The Great Diwali Discount!
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