Ashish Chaturmohta Sanctum Wealth Management
It was a volatile start to the New Year 2018, with the sudden sell-off in the last hour of the trade, after bulls had been in control for most of the trading session on Tuesday.
Still, market breadth was positive with an advance-decline ratio of 5:4 and broader indices closed flat-to-positive outperforming benchmarks.
After a strong 2017, Nifty has got off on a negative note with the index losing 0.9 percent to close at 10436 levels on an opening day.
For the last couple of weeks, the index had been trading in a narrow range but closer to its all-time high levels and on Tuesday, Nifty formed a bearish candlestick covering this range.
Now, it needs to be seen if there is any follow-through action on the downside that could lead to short-term pressure in the market.
Hence, breaking below 10400 levels, the index may decline initially towards 10320 and then 10230 levels. Also, INDIA VIX moved up by 5.39 to 13.35 and has been inching up in last one week from low of 11.6 level.
Further, the rise in volatility could be the cause of concern for bulls. On the upside, Nifty has overhead resistance at 10550 levels. It needs to cross above 10550 levels for it to rally towards 10700 and then 10840 odd levels on the upside.
Here is a list of top four stocks which can give up to 14% return in the short term:
Petronet LNG: BUY| CMP Rs256| Stop Loss Rs244| Target Rs290| Return 13%
The stock touched a high of Rs276 in the month of November 2017 and since then the price has corrected down to Rs239 levels. It has now retraced 50% of the swing from last August low 198 to high of 276 which comes around 237 levels.
The stock has been consolidating between 260 and 239 levels to form descending triangle pattern on daily chart. Price has given positive crossover with a 50-day moving average which has been acting as support and resistance for the stock.
MACD has moved above the neutral level of zero on daily chart suggesting the correction is over in the stock. Thus, the stock is bought at current levels and on dips to Rs252 with a stop loss below Rs244 for a target of Rs290 levels.
BHEL: BUY| CMP Rs95| Stop Loss Rs91| Target Rs106| Return 11%
The stock has been trading in a sideways range of Rs95 to Rs86 levels for the last seven weeks. In the last trading session, the stock witnessed a breakout with strong price momentum and good volumes indicating buying participation in the stock.
The stock has also seen a Bollinger band breakout with the expansion of bands after a consolidation suggesting the start of a fresh uptrend. On the weekly chart, the stock seems to be forming bullish inverted head and shoulders pattern with the right shoulder in the process of formation, suggesting the stock is in broad bottoming out formation process.
Traders can buy the stock at current levels and on dips to 94 with a stop loss below 91 for target 106 levels.
Kajaria Ceramic: BUY| CMP Rs725| Stop loss Rs695| Target Rs810| 11%
The stock has been in a sideways consolidation for the last three months, largely between Rs750 and Rs660 levels. But, looking at the broader structure of the stock on the weekly chart, it has formed descending triangle pattern over last six months period.
It has been forming higher lows and volumes over last one year have been above average indicating buying coming at higher levels in the stock.
The lows have seen a bounce back from long-term 200-day moving average. The stock is now trading at breakout levels and is likely to move higher from current levels. The stock is bought at current levels and on dips to Rs710 with a stop loss of Rs695 for a target of Rs810 levels.
Crompton Greaves Consumer: BUY| CMP Rs270| Stop loss Rs254| Target Rs310| Return 14%
The stock formed a strong base between Rs245 and Rs200 levels over the period of last six months. In November, it witnessed a breakout and hit a lifetime high of Rs292 on high volumes indicating a good buying participation in the stock.
Since then, the stock has been trading sideways between Rs280-250 odd levels consolidating its gains above its breakout level. In this period volumes have been below average and seen steady decline suggesting investors holding on too long positions in the stock.
MACD has given positive crossover on the daily chart. Thus, the stock is bought at current levels and on dips to 265 with a stop loss below 254 for target 310 levels.
Disclaimer: The author is Head of Technicals and Derivatives, Sanctum Wealth Management. The views and investment tips expressed by investment expert on Moneycontrol.com are his 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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