Ashish Chaturmohta
After a cautious opening, Nifty made a low of 9,004 and then rallied throughout the day to touch high of 9,334. The Nifty closed near the highs of the day at 9,315 up by 3.17 percent on May 27.
Broader market indices BSE Midcap and Smallcap saw significant underperformance compared to benchmark indices. However, both managed to log gains rising 0.54 percent and 0.27 percent, respectively, on Wednesday. The market breadth on NSE was positive with an advance-decline ratio of 3:2.
The index has formed a bullish body candle closing near the highs of the day and has crossed falling resistance trend line of the last four weeks connecting highs 9,889 and 9,585. Now, if it holds above 9,200 levels, expect a rally towards 9,600 levels.
If Nifty surpasses that, the next resistance is seen at 9,730 and then 9,889 levels. On the downside below 8,968, 8,800 can be expected. However, breaking below 8,800 selling pressure can expected towards 8,400 levels.
In Nifty June monthly expiry options, maximum open interest for Put is seen at strike price 9,000 followed by 9,500 while for Call maximum open interest is seen at 10,000 followed by 9,500.
Nifty options distribution data is suggesting a range of 9,000 and 9,500. India VIX was rangebound between 45 and 33 odd levels for last one month. Now, it is drifting lower and closed at 31.27 level. Staying below 35 level will be support for the market and any up move will cap the upside to keep the market range bound.
Below are the top 5 stocks which can return % in 1-3 months:
HDFC Bank: Buy | CMP: Rs 904 | Stop loss: Rs 860 | Target: Rs 1040 | Return: 15%
The stock had seen sharp fall from Rs 1300 levels to Rs 740 odd levels. In April month bounce back touched high of Rs 1019 and then corrected to Rs 826 levels. Price has moved above 21-day exponential moving average. After five days of consolidation in a narrow range stock has given breakout on upside with long body bullish candle. Thus, forming higher low on daily chart. High volumes at lower levels indicates accumulation in the stock. Relative strength index given positive crossover with its average on daily chart.
Thus, stock can be bought at current level and on dips to Rs 890 with stop loss below Rs 860 for target of Rs 1040 levels.
Hindalco Industries: Buy | CMP: Rs 133 | Stop loss: Rs 125 | Target: Rs 160 | Upside: 20%
Between January and March, the stock had a sharp decline from Rs 221 to a low of Rs 85. Since then, the stock has been trading below Rs 130 with higher lows. Thus forming an ascending triangle pattern on the daily chart. Volumes were high indicating accumulation at lower levels in the stock. Prices have consolidated above short term 20-day moving average which has acted as support on dips.
Now, the stock is seeing breakout from the pattern. Price has given breakout on the upside from Bollinger Band with an expansion of bands on daily chart indicating a continuation in trend in the direction of the breakout. Thus, the stock can be bought at current levels and on dips to Rs 130 with stop loss below Rs 125 for a target of Rs 160 levels.
Balkrishna Industries: Buy | CMP: Rs 1,076 | Stop loss: Rs 1,025 | Target: Rs 1,240 | Upside: 15%
The stock witnessed a sharp fall from Rs 1,300 odd levels to a low of Rs 679 in March this year. It has strong support in the region of Rs 750 and Rs 680 from where the stock has seen a bounce back on multiple occasions. Thus, indicating as value area for the stock. It has been in steady uptrend forming higher tops and bottoms since the low. It has crossed 61.8 percent Fibonacci retracement of the entire fall from Rs 1,297 to low of Rs 679.
Price has given breakout on the upside from Bollinger Band with the expansion of bands on daily chart indicating a continuation of trend in the direction of the breakout. MACD has given positive crossover with its average and moved above equilibrium level of zero on the weekly chart. Thus, the stock can be bought at current levels and on dips to Rs 1,060 with stop loss below Rs 1,025 for a target of Rs 1,240 levels.
Tata Steel: Buy | CMP: Rs 288 | Stop loss: Rs 274 | Target: Rs 330 | Upside: 14%
The stock declined sharply from Rs 500 to Rs 250 odd levels. It has taken support at long-term monthly trend line connecting lows of 2008, 2013 and 2015. The stock has seen consolidation between Rs 300 and Rs 250 odd levels for last 10 weeks above the trend line. Now, the stock is showing signs of a bounce back after consolidating at lower levels. MACD has given positive crossover with its average on the weekly chart. Relative strength index has given positive crossover with its average on the daily chart.
The stock can be bought at current levels and on dips to Rs 284 with stop loss below Rs 274 for a target of Rs 330 levels.
The author is Head of Technical and Derivatives, Sanctum Wealth Management
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