By Shitij Gandhi
The Nifty is seen dragging down from higher levels due to the liquidation of long positions. Since the inception of current expiry, we are seeing the continuous shedding of open interest (OI) at higher levels by foreign institution investors (FIIs), which clearly indicates a lack of buying interest and discomfort in the market at higher levels.
On Tuesday, the Nifty closed below important support of 9,150 futures. Option data also indicates negative move going forward as we have seen unwinding in puts and writing in calls.
The important point to note is that all the puts are trading near highs of month and calls are trading near lows of the month. This means put writers are on the back foot, whereas call writers are gaining confidence.
Overall data has turned slightly negative and more weakness can be seen. The next support is placed around 9,000 levels. We advise traders to stay cautious in the current expiry.
Top five stocks to buy based on technical triggers which can give up to 20 percent return in the short term:
Deepak Fertilisers: BUY| Target Rs 320| Stop Loss Rs 144| Upside 20 percent
On technical charts, the stock has seen a rally from Rs 200-285 levels in a very short span of time and then went into consolidation range of Rs 245-275, which has been seen since the start of this year till date.
On the daily charts, the stock has formed a double bottom at Rs 245 levels and risen sharply from there. Moreover, in Tuesday’s session, the stock also gave a consolidation breakout above its resistance with the rise in volumes.
The positive divergence in oscillators, along with rising volumes, suggest next run up in coming sessions. Traders can buy the stock in a range of Rs 265-270 for the target of Rs 320 with a stop loss below Rs 240.
GSPL: BUY| Target Rs 200| Stop Loss Rs 160| Upside 17 percent
The stock has been consolidating in a range of Rs 150-170 from January 2017 till date and seen constructing higher lows on the daily charts. The stock is also forming Ascending triangle formation which is considered generally bullish in nature.
The top part of the triangle appears flat at Rs 170, while the bottom part of the triangle has an upward slant. Moreover, on daily charts, the stock is trading above its 200-DEMA and all other important moving averages.
In the last trading session, it has also managed to give a breakout above its strong resistance level of 170 along with the sudden rise in volumes which confirms the triangle breakout as well. Traders can buy the stock in range of 170-175 for the upside target of 200 with stop loss below 160
GE Shipping: BUY| Target Rs 475| Stop Loss Rs 390| Upside 13 percent
After making a triple bottom around Rs 350 levels, the stock has moved up sharply in recent past and halted at Rs 440 levels. However, in the last few trading sessions, the rally in prices has halted as the stock is seen consolidating in the range of Rs 410-440 levels.
On the daily charts, stock has formed a rectangle formation which is generally considered as a continuation pattern. Moreover, all important moving averages along with positive divergence in oscillators are also suggesting that downside is well capped and the stock has potential to move up in coming sessions.
Traders can accumulate the stock in the range of Rs 420-430 for the upside target of Rs 475 with a stop loss below Rs 390.
McLeod Russel (India): BUY| Target Rs 195| Stop Loss Rs 165| Upside 11 percent
The stock has made multiple bullish formations on the daily charts which let the prices to move from Rs 140 levels to Rs 180 levels with various ups and downs over the period.
In the recent past, stock has formed pennant formation on the daily chart and gave a breakout above Rs 170 levels and tested Rs 185 levels. Now once again, the stock is forming a bullish flag formation which is again considered as a continuation pattern.
Traders can buy the stock in the range of Rs 175-180 for the upside target of Rs 195 with a stop loss below Rs 165.
NCC: BUY| Target Rs 195| Stop Loss Rs 165| Upside 16 percent
The stock has been consolidating in a tight range for quite a while but managed to give a breakout on the weekly charts with the rapid rise in volumes. On daily charts as well, stock has formed an inverted head and shoulder formation which is bullish in nature and gave a breakout above its neckline.
Prices are also well maintained above its all-important moving averages along with positive divergence in RSI and other oscillators. The minor pullback in prices seen in yesterday session gives good opportunity to go long in the scrip. Traders can buy the stock in range of 90-93 for the upside target of Rs 105 with stop loss below Rs 82.
Disclaimer: The author is Senior Research Analyst, SMC Global Securities Ltd. 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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