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Last Updated : Sep 29, 2017 12:00 PM IST | Source: Moneycontrol.com

Level of 9688 can’t be termed as bottom on Nifty; 5 stocks which can give up to 10% upside

Here is a list of top 5 stocks which can give up to 10% return in the short term.

 
 
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By Pritesh Mehta

IIFL Private Wealth

The recent market predicament is a cumulative play of multiple factors i.e. strained up move above prior peak of 10138, failure to sustain above gann numbers of 10090 & 10100 and reversal in BankNifty.

In the previous seven sessions, the index lost 5.3 percent and in the noon trade on Thursday, it made a low of 23611. However, the much-awaited comeback of market-leading sector BankNifty proved Nifty's saviour.

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The pullback intensity was extreme as it quickly regained control above the four-digit gann number of 2377(0) before shutting shop at 24008, up by 1.3%.

Meanwhile, snapping the losing streak of seven sessions, Nifty took a pause as bulls outstripped bears near the confluence of support zone of 9,700.

The Nifty dangled between negative and positive territory throughout but it sustained above the 9,700 mark after marking a low of 9,688. The fag-end recovery lifted Nifty towards 9789, before settling at 9,769, up by 33 points.

Thursday’s action in Nifty took the shape of an inside bar pattern. However, since this pattern appeared at the lower band of the previous large bearish candle, it's too early to term Thursday’s low of 9688 as an immediate bottom.

The Nifty breadth remained flat as about half of Nifty50 components ended lower indicating the participation of select stocks in today’s recovery.

Here is a list of top 5 stocks which can give up to 10% return in the next short term:

Ambuja Cements: BUY| Target Rs290| Stop Loss Rs257| Return 6%

Since March 2015, the stock has a tendency to revert back from the supply zone of Rs280-290. Even in the previous week, the history repeated itself as the stock reversed from the high of Rs292 and made a low of Rs260 (placed near the gann number of 257).

The corrective move also retraced 50% of the previous upmove. Base building activity was seen in this week’s trade around critical support zone suggesting a pause in the recent downtrend.

In Thursday’s trade, it provided a reversal move of 2 percent, we expect the stock to build on recent recovery and attempt the previous peak. Based on above rationale, we recommend a buy on Ambuja Cement above Rs267 with a stop loss of Rs257 for a target of 290.

ONGC: BUY| Target Rs190| Stop Loss Rs164| Return 10%

Multiplication of 360 degrees by applying a square of 9 from the significant high of Rs212 is placed around Rs158. The same coincides with 61.8% retracement mark of the entire move from Rs125 to Rs212.

So, base building pattern was seen around the point of confluence (between Rs155-158). At the start of the month, ONGC attempted to breakout from the base building pattern, suggesting a medium-term reversal.

Presence of multiple support provides a favorable risk-to-reward price set-up. With breakout in crude oil prices after being in consolidation phased for last nine months, we expect positive traction to continue in ONGC.

Based on above rationale, we recommend a BUY on ONGC between Rs170-172 with risk management level of Rs164 for a target of Rs190.

IndusInd Bank: SELL| Target Rs1610| Stop Loss Rs1710| Return 4%

The stock made a peak of Rs 1,804 in the first week of September. Thereafter it reversed unable to cross above the gann number of 1849. In the process, the stock staged a breakdown below the support of the rising trendline, suggesting a change of trend.

Also, it fell below multiple gann numbers which led to a sharp decline in Thursday’s intra-day trade. However, a late bout of buying in BankNifty closing trade resulted in a pullback in this stock.

However, the trend of the stock continues to remain down despite intra-day pullback. Current scenario and risk-reward ratio are ideal to create short positions.

Keeping in mind above-mentioned parameters, we recommend a short on IndusInd bank Oct Futs below Rs1,680 with a stop loss of Rs1,710 for a target of Rs1,610.

Vedanta: BUY| Target Rs335| Stop Loss Rs307| Return 7%

After making a high of Rs335 in the second week of September, the stock went through a phase of sharp decline. In the process, it touched a low of Rs297. The same level coincides with the support of its 50-DMA.

Also, it appears near the gann number of 289, which was defended during the corrective phase. Moreover, the point of polarity support around Rs290 provided some respite for the counter.

Recovery in last few sessions saw the stock attempting a breakout from a downward sloping trendline drawn from the recent high.

A close above Rs315 would lead to reversal from the corrective phase. Based on above observations we recommend a buy on Vedanta above Rs315 with a stop loss of Rs307 for a target of Rs335.

Power Grid: BUY| Target Rs225| Stop Loss Rs204| Return 9%

Failure to sustain above the gann number of 225 led to a reversal in trend as the stock retreated back to low of Rs205. The same level coincides with the support of its 200-DMA.

The same level is placed near the peak of the month of January 2017. So, the point of polarity level has provided a strong reversal. Moreover, the stock continues to move along with the structure of rising channel pattern which is in place since November 2016.

This channelized up move suggest that the stock is likely to retrace back to recent high, thereby continuing positive structure. Keeping in mind the above-mentioned parameters, we recommend a buy on Power Grid above Rs210 with a stop loss of Rs204 for a target of Rs225.

Disclaimer: The author is Head of Technical Research at IIFL Private Wealth. 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.

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First Published on Sep 29, 2017 11:52 am
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