Despite Thursday’s recovery, a decisive move above multiple supply points between 9930-9950 is required to gain upside momentum and breakout from the ongoing triangle congestion pattern.
By Pritesh Mehta
IIFL Private Wealth
Follow-up movement on the upside post a positive opening brought back Nifty50 around the recent peak of 9,926. An index reeling in congestion invariably exhibits such contrasting movements.
However, from the broader perspective, Nifty yet again defended the confluence of support zone between 9,700-9,770 and recouped much of recent decline. Consequently, rangebound activity remains intact.
However, despite Thursday’s recovery, a decisive move above multiple supply points between 9930-9950 is required to gain upside momentum and breakout from the ongoing triangle congestion pattern.
The breadth of the index favored the bulls with 30 of Nifty50 stocks closing in the green. Even as market participants seem perplexed, such volatile swings within a tight range of 200 points suggest that time is not right for trading on the index.
In such setups, one should stick to stock specific ideas until a clear, definitive bias on the index emerges.
Here is a list of top 5 stocks which can give up to 8% upside in short term:
Reliance Capital: BUY| Target Rs 870| Stop Loss Rs775| Return 8%
A steady move above most of the important averages has ensured the positive price structure of Reliance capital. Recently it took multiple support near its 21 Day EMA before ascending higher.
On Thursday, it witnessed positive break out of its triangle chart pattern. The said pattern can be considered as continuation pattern in a current ongoing uptrend.
Based on above observations, we recommend a buy on Reliance Capital above Rs805 with a stop loss of Rs775 and a target of Rs870.
Hindustan Petroleum: BUY| Target Rs 525| Stop Loss Rs 465| Return 7%
Charting into the uncharted zone the stock has resumed its outperformance. With robust long term chart set-up, the stock has managed to surpass recent peak of Rs462, which is now likely to act as crucial support.
For the second consecutive week, bulls remain interested in the stock. It has been consistently finding support near its 5-day EMA.
Based on above observations, we recommend a buy on Hindustan Petroleum between a Rs485-480 band with a stop loss of Rs465 and a target of Rs525.
Hindustan Unilever: BUY| Target Rs1290| Stop Loss Rs1180| Return 6%
A steady move above most of the important moving averages and ascending series of peak and bottom indicates healthy long term price set up.
During the recent correction, bulls outstrip bears near levels of Rs1,150 and since then it is moving higher; thereby resuming the prevailing uptrend.
A record high closing above Rs1,210 on a rising volume activity suggests an ongoing journey into the uncharted zone is likely to continue.
Based on above observations, we recommend a buy on Hindustan Unilever above Rs1,215 with a stop loss of Rs1,180 and a target of Rs1,290.
LIC Housing Finance: BUY| Target Rs725| Stop Loss Rs645| Return 6%
The stock has been trading in an overall uptrend. Recent Price structure shows a sharp price cut of 20 percent from its all-time high of Rs794, marked during June’17.
However, yet again, it recovered from its 50-week EMA levels, also zones of Rs625 which acted as hurdle point during Oct’ 16, are now transformed into savior point.
Reclaiming levels of Rs670, the stock has managed to settle above its 21 day EMA, also the appearance of a bullish candle in Thursday’s trade implies that important support is now placed near Rs650.
Based on above observations, we recommend a buy on LIC Housing Finance between Rs670-675 with a stop loss of Rs645 and a target of Rs725.
IndusInd Bank: BUY| Target Rs1790| Stop Loss Rs1660| Return 8%
IndusInd Bank is attempting to break out above a strong supply zone after a long period of consolidation at the top of its trend. This consolidation was in place since the start of the month of August.
During the entire phase of consolidation, the stock managed to defend the support of its 5-weekly EMA. Since it is an up trending stock, traders should always use any phase of consolidation and breakout from the same to build longs.
Moreover, the stock has the tendency to witness shallow price correction before resuming its prevailing uptrend. The stock is now attempting to break out from the neckline of a bullish H&S pattern.
Confirmation above four-digit gann number of 1681 and three digit gann number of 169(0) would result in an upside breakout. Based on above parameters, we recommend a buy on IndusInd Bank between Rs1,680-1,690 with a stop loss of Rs1,660 and a target of Rs1,790.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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