Moneycontrol
Feb 14, 2018 08:09 AM IST | Source: Moneycontrol.com

Nifty could see some more selling at 10600-10700 levels; 4 stocks to buy this week

A short-term base is placed around 10250 in case that is broken, it will take the Nifty to the next support which is placed in the zone of 10050 - 10100. On the higher side, we may see bears getting activated for round two at higher retracement of 10,650 – 10,700.

 
 
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By Mustafa Nadeem

The Indian equity markets continue to trade in the range that was set on 6th February which was briefly between 10600 to 10300 levels.

The week started off with Global equity markets recouping the previous week's losses while other major European indices also recovered from their major swings low that was seen in the 1st week of February.

The Nifty inched up in the early session on the back of positive global cues and saw a rebound to close above 10,500. Global markets bounced back on the back of lower level buying.

Since most of the indices were in oversold position as per the leading indicators for the last couple of days. The consolidation we have seen also lead to a base building for short-term directional players to play the counter-trend.

Though the overall indices look in a short-term bearish move, it will be definitely catching a falling knife to call it a base for the next bullish move that can continue for few more weeks.

Indian indices rebounded on the back of firm global cues. The relative strength index or the RSI, a momentum indicator also suggests a rebound of the trend from an oversold zone of 30 - 40 to the upside.

Lagging indicators are still suggesting to be in a watch mode for long-term players as prices suggest to be in sell mode with MACD below the signal line and the Zero level.

The range for the market can continue to be stiff as it settles down with volatility cooling off. The important support for the market is now established at 10250 level which needs to be sustained for a pullback towards 10,650 – 10,700.

A short-term base is placed around 10250 in case that is broken, it will take the Nifty to the next support which is placed in the zone of 10050 - 10100. On the higher side, we may see bears getting activated for round two at higher retracement of 10,650 – 10,700.

A short-term counterplay can be taken for bulls with an initial price target of 10,610 – 10,630 while overall trend still remains in favor of bears.

Here is a list of top 4 stocks which could give up to 8% return:

BEML: BUY| Target Rs1450| Stop Loss Rs1270| Return 7%

The stock has reversed from an oversold zone established in the last two-three days. The stock formed a bullish engulfing pattern coupled with big white candlestick suggests that the confirmation of double bottom pattern formed at lower levels which is bullish in nature.

RSI has also reversed from oversold territory. The overall price action suggests a rebound to be in place for higher levels of Rs1450 with a stop loss below Rs1270.

Adani Enterprises: BUY| Target Rs235| Stop Loss Rs 202| Return 8%

The stock is trading at 52-weeks high and is showing strength which is likely to continue with volume action supporting the price. A V-Shaped recovery from the last swing low in a fierce bullish manner also suggests the internal strength of the stock.

We may see the formation of a higher top, and higher bottoms to continue. The wave analysis suggests that the next target of stock is placed at Rs235 with a stop-loss below Rs202.

IGL: BUY| Target Rs325| Stop Loss Rs290| Return 7%

The stock has outperformed the recent structure with average volumes rising at the crucial support placed at Rs280. This also confirmed the formation of a double bottom at lower levels.

The stock has also taken support at lower bands while a long declining downtrend seems to have ended with a bullish mat and hold a pattern that is a highly reliable bullish pattern as per candlesticks.

We expect it to continue the trend on the higher side with a target of Rs325 and a stop-loss placed at Rs290.

LIC Housing Ltd: BUY| Target Rs550| Stop Loss Rs500| Return 5%

It has been in a declining channel but the stock has recently made a reversal pattern along with a positive close. The price action is trading near its lower part of the trading range in a declining channel.

The leading momentum indicator suggests a divergence in price as the relative strength index or the RSI has strengthened from the last few days. We expect LIC to be bullish for next few days with price target of 550 with a stop loss placed at 500

Disclaimer: The author is CEO, Epic Research. 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.
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