Nifty likely to enter risk-off mode; 5 stocks which could give up to 17% return

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Pushkaraj Sham KanitkarGEPL Capital

The market created a fresh 52-week high last week on the back of a stellar performance of heavyweights such as ICICI Bank standalone and the Bank Nifty. Nonetheless, the later part of the week saw a correction in the other heavyweight’s pack that dragged down the index to close down below the 9,300 mark.

The macro-technical alert in the form of break in international commodities that was raised seems to have acted, to say the least. This brings us to the juncture, where a risk-off status may set in for next few days.

This may set into a correction towards 9,190 levels, followed by the 6-week low placed at 9,020. After a stellar move seen in the past few weeks, the profit booking in the heavyweights is certainly welcome; though it seems quite evenly balanced.

Here is a list of top five stocks to buy based on technical factors in the short term:

Indiabulls Housing Finance: BUY| Target Rs 1300| Stop Loss Rs 993| Return 17%

The stock is an outperformer within the market and the NBFC pack as the scrip has sustained the correction very well. A breakout of 6 weeks of consolidation above the Rs 1,000 mark has led it onto a new 52-week high on the back of good volume pickup.

We expect a move up to 1175 (around 5%) from current levels, which if crossed further may move onto Rs 1,300. A stop loss maybe placed a bit into the consolidation zone placed at Rs993.

Avenue Supermarts: BUY| Target Rs 900| Stop Loss Rs 786 | Return 11%

After proving to be a double-bagger on the listing, the scrip had shown a stellar move till mid-April. The prices have consolidated over the last 3 weeks in a band of Rs806-720 while maintaining a strong undertone which is a positive sign.

It has moved on to a fresh high of Rs814.40, on large volumes over the past few days. The same is accompanied by a surge in momentum.

We expect a move onto Rs850 and then extrapolated to Rs900 with a stop loss placed half way into the breakout band placed at Rs786.

ZEE Entertainment Enterprises: SELL| Target Rs 467| Stop Loss Rs 537| Return 7%

The stock witnessed a classic head & shoulders breakdown, below the Rs511 mark, accompanied by high volumes is a big red flag in the scrip prices.

The head to the neckline is defined by around 44 pints (511 to 555) spanning over two shoulders created in March & Mat 2017. The target maybe placed around Rs467 mark (44 points below the neckline).

A fair risk-reward seems possible with a stop loss for the trade be placed at Rs537, a bit above the right shoulder.

Biocon: SELL| Target Rs 972| Stop Loss Rs 1086| Return 6%

A gradual price move from March 2017, has met with a faster retracement, wherein prices have broken below the 2-month low of around Rs1,042.

The said retracement has taken place on the back of Heavy volumes (around 4-5 times of averages). Prices in the recent few days have remained extremely volatile with the majority of the days showing a negative candle, an indication of consistent selling at every higher level.

A dipping RSI around 39 indicates the waning strength in the prices. Prices are ripe for a correction onto the 200-DMA placed at 972. The stop may be placed a bit above the 38.1% retracement of current fall at a level of Rs1,086.

Reliance Industries: SELL| Target Rs 1,230| Stop Loss Rs 1,399| Return 7%

In line with the overall weak trajectory in the commodities sector (a 1.75% correction in the index over the week), the prices have remained falling off the cliff over the whole of last 2 weeks.

The last week saw a break below the 5-week low placed at Rs1,347 accompanied by a substantial rise in the delivered quantity indicating a consistent selling at higher levels with the prices waning all through the week.

The RSI after having reached overbought levels around 72 has softened off to 45, showing a waning strength. The prices are on course for a break below the gap created in March 2017 between 1325-1311, that may be followed by a correction towards the 3-month LOWS around the 1230 mark.

The bearish view would stand negated only on a closing above the 5th May’s high placed at the Rs1,399 mark.

Disclaimer: The author is AVP - Technical Research at GEPL Capital. 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.