Shitij Gandhi
The Indian markets witnessed sharp gains in the October 29 session as celebrations among bulls continued post-Diwali, supported by a rally in auto, metal and energy stocks.
The Nifty indices lodged gains of more than 1 percent to close above the 11,750 mark. On the derivative front, call writers were seen covering their short positions while put writers added hefty open interest at 11,700 strikes.
On the technical front as well, the Nifty gave a sharp breakout above the key resistance levels of 11,700 after consolidating in the range of 11,500-117,00 for the past five trading sessions.
This clearly shows that the momentum is likely to be tilted towards bulls in the coming sessions as well and any dip into the prices should be used to create fresh longs.
On the lower side of the range, 11,700-11,650 should act as strong support for the Nifty (SPOT) and the current trend is likely to move towards 11,850-11,900 levels.
Here's a list of top three stocks which could give 10-12 percent return in the next three to four weeks:
BEML: Buy| LTP: Rs 1,008| Target: Rs 1,115| Stop Loss: Rs 920| Upside 10%
The stock has consistently traded in a rising channel with the formation of a higher and higher bottom pattern on the daily as well as on the weekly interval.
At the current juncture, the stock has formed an inverted head and shoulder pattern and has also given a breakout above the neckline of the pattern formation.
The breakout has occurred with marginally higher volumes which suggest more upside for the stock in the coming sessions. Traders can accumulate the stock in the range of Rs 995-1,005 for the upside target of Rs 1,115 levels with a stop loss below Rs 920.
KEI Industries: Buy| LTP: Rs 575| Target: Rs 645| Stop Loss: Rs 525| Upside 12%
The stock has given a consolidation breakout above 500 levels and since then it has been trading in a thin range of Rs 500-560. The consolidation has formed a symmetrical triangle pattern on the daily interval.
We have observed a fresh breakout above the falling trend line on October 29 from the triangle pattern with larger volumes which suggest next up move into the prices.
Traders can accumulate the stock in the range of Rs 570-575 for the upside target of Rs 645 levels, and a stop loss can be placed below Rs 525.
Timken India: Buy| LTP: Rs 821| Target: Rs 922| Stop Loss: Rs 750| Upside 12%
From the past five weeks, the stock consolidated in a range of Rs 760-820 and consistently maintained above its short and long-term moving averages on the daily and weekly intervals.
In the October 29 session, we observed a fresh breakout into the prices after a prolong consolidation which suggests more upside into the prices.
Traders can accumulate the stock in the range of Rs 815-820 levels for the upside target of 922 levels, and a stop loss can be placed below Rs 750.
The author is a Senior Research Analyst, SMC Global Securities
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