Ashish Chaturmohta
Sanctum Wealth Management
The Nifty50 hit a new high of 10,501 in closing moments of trade on Friday to settle at 10493 levels, up by 1.6 percent for the week.
Benchmark indices have been sideways and are now trading in a narrow range for the last three trading sessions. But, the broader markets witnessed action last week with the BSE Mid and Small cap index gaining 3.5 percent and 4.5 percent respectively for the week.
Looking at the price movement of the last couple of months’, the price has broadly traded in a range of 10,500-10,000 odd levels and formed W shaped pattern which is likely to see a breakout on the upside.
In Nifty options, 10450-10500 Puts have seen significant OI additions suggesting writing activity, while 10400 and higher calls have seen unwinding suggesting option traders are looking for the market to move higher in the expiry week.
The Nifty closed at a new all-time high on Friday and seen small consolidation at breakout levels. Crossing and sustaining above 10500 levels on a tradable basis, the index can be expected to rally towards 10700 levels and then 10840 odd levels on the upside.
On the downside, immediate support is seen at 10320 levels, while major support for the market remains at 10,000 odd levels. INDIA VIX has seen cooling off in last week to 11.76 levels which have been supporting for the bulls.
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Network18: BUY| CMP Rs60| Stop loss Rs55| Target Rs75| Return 25%
The stock has formed a bullish inverted head and shoulders pattern on the weekly chart. The pattern low has been made on a relatively low volume, while the rising leg of the pattern in the latter half has been on high volumes.
Thus, indicating accumulation in the stock from lower levels. Last week, the stock witnessed a breakout from this pattern on strong price momentum and volumes indicating a breakout is likely to be sustained.
The stock has also crossed a major falling resistance trend line originating from December 2014 high of Rs71 and broken the sequence of lower top formation.
The price has also seen a breakout from Bollinger band with the expansion of charts on weekly chart suggesting the start of a fresh uptrend. Thus, the stock is a buy at current levels and on dips to Rs58 with a stop loss of Rs55 for target Rs75 levels.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
CESC: BUY| CMP Rs1049| Stop loss Rs1000| Target Rs1200| Return 14%
The stock had seen a rally from 850 odd levels in July to high of 1080 in September. For the last three months, it has been in a sideways to negative corrective mode between 1080 to 972 levels. This price action has led to the formation of a descending triangle pattern on daily chart.
Last week, the stock witnessed a breakout from this pattern on strong momentum and high volumes indicating a breakout is likely to be sustained.
Price has also seen a breakout from Bollinger band with the expansion of charts on the daily chart suggesting a start of a fresh uptrend. The stock has seen a bounce from its 100-day moving average which has acted as support for the stock in the past.
MACD has given positive crossover on the daily chart. Thus, the stock is a buy at current levels and on dips to Rs1030 with a stop loss of Rs1005 for target Rs1200 levels.
Tata Chemical Ltd: BUY| CMP Rs735| Stop loss Rs700| Target Rs845| Return 15%
The stock had seen a strong rally from the low of Rs568 in September to a high of Rs766 in October on high volumes indicating buying participation.
Since then the price has been trading in a range for the last couple of months between Rs766 and Rs703 levels on low volumes indicating investors in the stock holding on to their longs even after the sharp run-up.
This correction has retraced less than 38.2% Fibonacci retracement of the upswing (568-766), indicating strength in the counter. This consolidation has now formed descending triangle pattern on the daily chart.
MACD has given positive crossover with its average on daily chart after turning up from the neutral level of zero suggesting price is likely to resume its uptrend.
Hence considering the price structure and volume action breakout can be expected to be on the upside. Thus, the stock is a buy at current levels and on dips to 720 with a stop loss of 700 for target 845 levels.
Dabur: BUY| CMP Rs353| Stop loss Rs335| Target Rs400| Return 17%
The stock had seen rounding bottom formation between 320 and 260 levels from September 2016 to October 2017. At the start of November, the stock gave a breakout from the pattern with a sharp spike to hit a high of 361 levels.
Since then the stock has been trading in a range of 352 and 330 levels above previous breakout level. The 20-day moving average has been acting as support for the stock and recent reversal has been from the average.
Now, the stock is showing signs of strength and likely to see the start of a fresh uptrend. Thus, the stock is a buy at current levels and on dips to 347 with a stop loss of 335 for target 400 levels.
Granules India Ltd: CMP Rs132| Stop loss Rs122| Target Rs165| Return 25%
The stock has seen major consolidation between 165 and 100 levels over last two years. Since August 2017, the price has been forming higher lows suggesting buying coming at higher levels. The recent decline in the stock from 140 to 120 levels has been on below-average volumes. While the bounce from 122 levels has been on high volumes suggesting accumulation at lower levels.
MACD has given positive crossover with its average on the daily chart and moved above neutral level of zero. Thus, the stock is a buy at current levels and on dips to 129 with a stop loss of 122 for target 165 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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