If index holds above 10,000, there could be more upside but it has to break above 10,137 convincingly.
The Nifty took resistance near its previous high of 10,137 on Wednesday. It lost all the shine and closed at 10,079.30 with loss of 13.75 points.
This week, Nifty showed strength after breaking above its strong resistance and psychological levels of 10,000 with good volumes.
We have witnessed a strong short covering in the index, which took it near its previous high of 10,137. Now, if index holds above 10,000, we may see more upside in the index but it still has to break above 10,137 convincingly.
On the derivative front, highest open interest was seen in 9,900 PE and 10,000 PE which will act as a strong support in this expiry, whereas on the higher side 10,200 CE and 10100 CE has highest open interest. So 10,200 will be strong resistance for the September expiry.
In September series, we have witnessed strong Put writing in 9900 PE and 10,000 PE which suggests strong upside in the index in the near term.
For the upcoming sessions, 10,000 would be overall trend deciding level. We recommend initiating long calls on every dip in the index with keeping a stop loss below 10,000 on a closing basis and target would be 10140-10200.
Above 10200, the next logical target for the index stands at 10500-10600 by December end. Investors need to use stock specific approach to trade in coming sessions.
Here is a list of four stocks which can give up to 17% return in short term:
TV18 Broadcast: BUY | Target Rs 47| Stop Loss Rs 40| Upside 9%
The stock touched its 200-DMA for the second time in the start of the August and from there we have seen the stock gaining momentum which took it above Rs 43 which was a strong resistance level for the index.
On the daily chart, the stock has also broken above its double bottom pattern with strong volumes. We have also witnessed bullish flag breakout with heavy volumes suggesting that the stock is ready to change its consolidation mood.
On both weekly and daily charts, the stock is trading above all strong DMA’s like 200-100 which shows strength in the stock in near term.
Considering above technical breakouts, Bonanza recommends a buy call on stock at current levels to any dip near Rs42 for the target Rs47 with keeping stop out level below Rs40 on a closing basis.
Berger Paint: BUY | Target Rs 310| Stop Loss Rs 240| Upside 16%
On the weekly charts, the stock has given a decisive bullish flag breakout with decent volumes hinting that it is ready to touch fresh highs soon.
On the daily chart, the stock broke above its downtrend channel pattern and closed with strong volumes. The stock also broke above its Cup & Handle pattern on Wednesday’s session with strong volume supporting existing position.
The stock is trading in an overall uptrend and recent correction in Berger Paint can be considered as a healthy correction.
Considering above technical setup, traders can accumulate the stock at current levels to any dip near 260 for the target of Rs 310 & Rs 350 with a stop loss below Rs 240 on a closing basis.
Caplin point: BUY | Target Rs 780 | Stop Loss Rs 635| Upside 14%
The stock is trading in a strong uptrend and the recent correction can be called as a healthy correction because on Wednesday session we have seen strong consolidation breakout with huge volumes suggesting Caplin Point is going to resume its overall uptrend.
If we look at the broad chart structure, the stock rallied after consolidation break every time historically. Considering the anecdotal evidence, we may expect fresh highs in the counter.
The momentum indicator, RSI, currently reads at 58 which is considered as bullish zone and stock also managing itself above all strong DMA’s.
Traders can take a position in the counter at current levels to any dip near 670 for the targets of 780 and stop out levels can be kept below 635 on a closing basis.
Info Edge: BUY | Target Rs 1200 | Stop Loss Rs 930| Upside 17%
The stock has given its first consolidation breakout in November 2013, after that it rallied one way and took pause at Rs1000 levels in November 2014.
The stock consolidated for nearly three years and fresh breakout happened in June with strong volume activity. After recent correction, the stock again started moving northwards with increasing volumes which is a good sign.
On the daily chart, the stock broke its downtrend line on Wednesday session with strong volume suggesting an immediate move towards 1120 levels. We expect prices to move northwards towards 1200 in near term.
Traders can take a position in the counter at current levels to any dip near 980 for the targets of 1120-1200 and stop out levels can be kept below 930 on a closing basis.Disclaimer: The author is Senior Research Analyst, Bonanza Portfolio Ltd. The views and investment tips expressed by investment expert on Moneycontrol are his own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.