By Hadrien Mendonca
The Nifty which broke its lower top lower bottom structure in the previous week was seen consolidating so far this week. The Nifty was stuck in a 100-point trading band with 10,650 being the higher end and 10,500 lower end of the range.
Both benchmarks failed to make any substantial progress in the last five days. Going forward, the scenario has not changed much as a fresh rally is likely to be triggered only if the 10,650 resistance zone is broken convincingly.
While a crack below 10,500 would mean fresh downside. Bank Nifty too struggled to surpass its 100-DEMA of 25,100, while the 200-DEMA of 24,550 would act as a strong support zone for the Bank Nifty.
Defensive stocks are making a comeback as the Nifty FMCG index has broken out from a Flag Pattern on the daily chart. Index heavyweights such as ITC and Hindustan Unilever would be in demand and can be considered as safe bets in the short-term.
Here is a list of top three stocks which could give up to 8-10% return in the short term:
Manappuram Finance Ltd: BUY| Target Rs 129| Stop Loss Rs115.5| Returns 8%
The stock has been in a declining mode for the past two weeks and is finally on the verge of breaking out from a declining channel pattern on the daily chart.
Our weekly chart analysis indicates that stock has managed to hold above the rising trendline support zone which further accentuates our bullish stance on the stock.
Rising volumes and relative strength further indicate that the momentum is likely to extend further. We expect the sock to make an attempt to rally towards its potential target of Rs 129 in the medium term.
DCB Bank Ltd: BUY| Target Rs 213| Stop Loss Rs 187.5| Returns 9%
The stock has been consolidating with a slight downward bias for the past eight trading session and is finally showing early signs of reversal. DCB Bank is on the verge of a Flag pattern breakout on the daily chart.
A close above Rs 198 would confirm the same. We expect DCB Bank to rally towards its potential target of Rs 213 in the medium term.
Escorts Ltd: BUY| Target 1047| Stop Loss Rs 917| Returns 9%
In the past two weeks, the stock has been stuck in a sideways phase. The decline seems to be getting arrested around the 21-DEMA which has acted as a strong support zone in the recent past.
After forming a Doji candlestick it witnessed impressive follow-up buying and is now on the verge of a declining channel pattern breakout.
We expect Escorts to rally towards its potential target of Rs 1047 in the medium term. Translating into a 9 percent upside from CMP.Disclaimer:
The author is Senior Technical Analyst, IIFL. 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.