Nandish ShahHDFC Securities
The Nifty extended its gains on Monday by rising 26 points to close at a record high of 11,387. The Nifty Midcap and Smallcap indices continued their northward journey for the twelfth day in the row, rising 0.45 percent and 0.21 percent, respectively. The advance-decline ratio remained positive for 11 days on the trot, the first after January 2012.
On a year-to-date (YTD) basis, the Nifty is up over 8 percent, while midcap and smallcap indices are still down 9 percent and 16 percent, respectively, which clearly indicates that there has been a huge gap between the performance of largecap and mid and smallcap stocks in last 7 months.
The recent recovery in the midcap and smallcap indices has managed to sustain and it seems the market has started narrowing down the performance gap between large and mid and smallcap indices. They are likely to outperform the broader Indices during the coming days. After 3 days of correction during last week, the Bank Nifty resumed its uptrend with a rise of 3 percent during the last two days.
The short term target for the Bank Nifty is seen at 28,400, while support for the same is placed at 27,450. If we were to see the medium and long term charts, then the ultimate target is seen at 29,300 levels.
Long positions have being built in the Nifty futures during the last few days. Aggressive long build-up is seen in Bank Nifty futures during the last two days.
Foreign institutional investors created fresh longs in stock futures and index options segment (bought calls and sold puts).
Among options, put writing is witnessed at 11,200-11,300 levels while calls have been written at 10,600 levels. There is a strong support for the Nifty at 11,170 -11,200 levels.
Considering the evidence discussed above, we advise accumulation of long positions in the Nifty with a stop loss of 11,200 and a target of 11,600.
Here is a list of 3 stocks that could return 5-12 percent in next 1 month:
Kalyani Steel: Buy| LTP: Rs 282| Target: Rs. 305 | Stop-Loss: Rs 270 | Return 8%
Kalyani Steel has given a bullish breakout on the daily chart on Monday by closing above the downward sloping trendline, adjoining the highs of 18-June-2018 and 10-July-2018.
It also managed to close above the resistance level of Rs 278 with higher volumes to close at a two-month high. The stock price is trading above its 5 and 20-day SMA indicating a bullish trend for the short to medium-term.
The momentum indicators and Oscillators like RSI and MACD are showing strength in the stock. Metal as a sector is doing well and looking good for the short-term. Therefore, we recommend buying Kalyani Steel for the upside target of Rs 305, and a stop loss placed below Rs 270.
UPL: Buy| LTP: Rs 656| Target: Rs. 690 | Stop-Loss: Rs 635 | Return 5%
UPL has given a breakout from the range of Rs 630-650 on the daily chart on Monday by closing above Rs 650 levels with the rise in volumes to close at a one-month high.
The stock price is currently trading above its 5 and 20-day SMA indicating a bullish trend for the short to medium-term.
The momentum indicators and Oscillators like RSI and MACD are also showing strength in the Stock. Therefore, we recommend buying UPL for the upside target of Rs 690, and a stop loss placed below Rs 656.
Deepak Nitrite: Buy| LTP: 250| Target: Rs 280 | Stop-Loss: Rs 235 | Return 12%
After forming a double bottom at Rs 215 levels during last month, the stock price has given a bullish breakout above the downward sloping trendline, adjoining the highs of 24-April, 25-June, 10-July and 01-August 2018.
The stock price also closed above its 200-day-SMA on Monday with higher volumes. The momentum indicators and Oscillators like RSI and MACD are showing strength in the stock for the short to medium-term perspective.
Therefore, we recommend buying Deepak Nitrite for the upside target of Rs 280, and a stop loss placed below Rs 235.
Disclaimer: The author is a Technical & Derivatives Analyst at HDFC Securities. 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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