Nifty witnessed a volatile session of trade. After opening in the negative, it rallied back immediately but couldn’t sustain at higher levels and closed lower. The Nifty closed at 8,749 levels down 0.49 percent for the day.
Broader market indices, BSE Midcap and Smallcap outperformed the benchmark indices with a gain of 1.9 percent and 1.86 percent, respectively, for the day. The market on NSE was negative with 2 stocks declining for every advance.
Intraday, Nifty touched high of 9,132 which is a 3-week high, but fresh selling emerged from higher levels. Thus, it formed a bearish shooting star candle on the daily chart. On a shorter time frame, the index has formed a bullish inverted head and shoulders pattern on the daily chart.
The index is facing resistance above 9,000 i.e. the neckline level, thus it must sustain above 9,000 for the market to move higher towards 9,500-9,600 levels. On the downside below 8,600 levels, the index can see a decline towards 8,360 levels.
Overall, Nifty is likely to trade in a broader range of 8,000 and 9,000 levels before the next directional move.
In Nifty April monthly expiry options, maximum open interest for Put is seen at strike price 8,000 followed by 7,500; while for Call maximum open interest is seen at 9,000 followed by 10,000. Nifty options distribution data is suggesting a wide range of 8000 and 9000.
India VIX index, a measure of volatility, after touching 11 year high of 86.6 has seen cooling off and currently at 52 levels. If VIX sustains above 50 levels, then pressure can be seen in the market. It needs to move below 40 levels for stability to return to the market.
Here are the top 5 stocks which are good bets for 1-3 months:
Alkem Laboratories: Buy | CMP: Rs 2671 | Stop loss: Rs 2535 | Target: Rs 3070 | Return: 15%
The stock witnessed major consolidation between Rs 1650 and Rs 2300 odd levels over almost 2-year period. Thus, it has formed a base for next leg of major uptrend. In January, the stock witnessed breakout from the base to touch high of Rs 2716 and then corrected Rs 2200 odd. It has taken support and bounced back to hit new all-time high of Rs 2736 in yesterday's session.
Recent couple of sessions have seen high volumes. Thus, indicating fresh buying participation in the stock in current market scenario. Price has given breakout on upside from Bollinger Band with expansion of bands on daily chart indicating continuation of trend in the direction of breakout. Relative strength index and Stochastic have given positive crossover with their respective averages on daily.
Thus, the stock can be bought at current levels and on dips to Rs 2630 with stop loss below Rs 2535 for target of Rs 3070 levels.
Dabur India: Buy | CMP: Rs 488 | Stop loss: Rs 463 | Target: Rs 560 | Return: 14%
The stock touched all-time high of Rs 525 in early March this year and then declined to Rs 386 levels. In the process, it corrected 78.6 percent Fibonacci retracement of the major rise from Rs 358 to Rs 525. Over the last 3 weeks, the stock has seen consolation between Rs 386 and Rs 455 levels.
Volumes have been above average at lower levels and breakout from consolidation has also happened on higher volumes. Thus, indicating buying participation in the stock. The price has moved above 200-day moving average after consolidating below it. Stochastic has given positive crossover with its average on daily chart. Thus, the stock can be bought at current levels and on dips to Rs 480 with stop loss below Rs 463 for target of Rs 560 levels.
Dr Reddy's Laboratories: Buy | CMP: Rs 3683 | Stop loss: Rs 3500 | Target: Rs 4250 | Return: 15%
Looking at broader monthly charts, the stock has formed rounding bottoming out pattern over four-year period. Volumes at lower levels have been high indicating accumulation in the stock. Now the stock is witnessing breakout on strong momentum and high volumes. Price has given breakout on upside from Bollinger Band with expansion of bands on daily chart indicating continuation of trend in the direction of breakout.
The Average Directional Index (ADX) line, indicator of trend strength is turning up from equilibrium level of 20 with rising Plus Directional line on daily chart. Thus, stock can be bought at current levels and on dips to Rs 3625 with stop loss below Rs 3500 for target of Rs 4250 levels.
HDFC Life Insurance: Buy | CMP: Rs 477 | Stop loss: Rs 450 | Target: Rs 560 | Return: 17%
From all-time high levels of Rs 646, the stock has seen major correction to touch low of Rs 340. Here, the stock has taken support around its previous consolidation lows i.e. its earlier base. It bounced back from lows to current levels. Price has moved above short term 21-day exponential moving average which was acting as resistance on bounce back during the decline. Volumes have been higher at lower levels indicating accumulation in the stock. Stochastic has given positive crossover with its average on daily chart.
Thus, the stock can be bought at current levels and on dips to Rs 470 with stop loss below Rs 450 for target of Rs 560 levels.
Eicher Motors: Sell | LTP: Rs 13158 | Stop loss: Rs 13800 | Target: Rs 11200 | Return: 17%
The stock is in major downtrend forming lower top and lower bottom on weekly chart. It has formed bearish head and shoulders pattern on monthly chart. The stock has broken key support of Rs 15,000. Breakdown has been on high volumes indicating selling pressure in the stock.Momentum indicators are in bearish mode on short term as well as on long term chart. Thus, the stock can be sold at current levels and on rise to Rs 13350 with stop loss above Rs 13800 for target of Rs 11200 levels.
The author is Head of Technical and Derivatives, Sanctum Wealth Management.Disclaimer: 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.