Achin Goel
The Nifty started off higher following positive global cues. At the higher end, the index found resistance at its recent high of 11,078 on Wednesday, which resembles a double top formation on the daily chart. Formation of a double top suggests exhaustion of the bullish trend in the market and a likely reversal in the short-term. The index has formed a bearish AB=CD on the daily chart, which suggests the possibility of a negative reversal in the short term.
On the daily chart, the relative strength index (RSI) has failed to touch a new high with a price rise, which indicates negative divergence. The latter suggests that momentum is expected to remain negative in the near term.
Going forward, the trend is expected to remain negative as long as the Nifty sustains below the recent high of 11,078. The index may move down towards 10,820, and below that we see a further correction towards 10,670 levels.
Here is a list of top 3 stocks that could return 10-15 percent in the next 1-2 months:
Ashok Leyland Ltd: Buy| CMP: Rs 110.55| Target Rs 127| Stop Loss: Rs 104| Return 15%
On the daily chart, the stock has completed a bullish harmonic ABCD pattern, which suggests the possibility of a negative reversal in the short-term.
The price has completed 61.80% retracement at 109 of the previous rise from the swing low of Rs 73 to swing high of Rs 167.50.
On the daily chart, a positive divergence is visible in the RSI (14) which suggests a positive shift in the price in the days to come.
Traders can accumulate the stock in the range of Rs 109-111.50 for the target of Rs 127 and a stop loss placed below Rs 104.
Castrol India Ltd: BUY| CMP: Rs. 159.05 | Target Rs. 176| Stop Loss Rs.153| Return 11%
On the daily chart, a Bullish Harami pattern has formed which suggests growing optimism in the stock. In addition, on the daily chart, price found initial support at a swing low on the daily chart.
The momentum indicator, RSI (14) has shown a positive crossover on the daily chart which suggests momentum to turn positive in the near to short-term.
Traders can accumulate the stock in the range of Rs 157-160 for the target of Rs 176 with a stop loss below Rs 153.
Emami Ltd: BUY| CMP: Rs. 550.40 | Target Rs. 606| Stop Loss Rs.524| Return 10%
The stock has moved above its previous swing high on the daily chart which suggests growing optimism in the stock. In addition, the stock has also moved above its downwards consolidation pattern.
The momentum oscillator, RSI (14) on the daily chart is in positive divergence which suggests the positive shift is expected in the stock in the near term.
Traders can accumulate the stock in the range of Rs 548-552 for the target of Rs 606 and a stop loss placed below Rs 524.
Disclaimer: The author is Head of Wealth Management and Financial Planning, Bonanza Portfolio Ltd. The views and investment tips expressed by investment experts 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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