Nandish Shah
The Nifty continued its winning streak for the fifth day on the trot to end with gains of 55 points at 10,961, its highest close since December 19, 2018 on Monday.
The Nifty50 also managed to close above the crucial resistance of 10,930 levels where it was finding resistance during the last 3 sessions.
However, the Nifty Midcap and Smallcap-100 indices continued their underperformance by falling 0.8 percent and 0.9 percent, respectively, during the last week.
On the YTD basis also, they are down by 3 percent and 2 percent, respectively, compared to 1 percent gain seen in Nifty. Currently, Nifty is placed above its 20, 50, 100 and 200-Days EMA. The Nifty and the Bank Nifty have been maintaining bullish setup of higher tops and higher bottoms.
The Symmetrical Triangle breakout which got confirmed on Jan 15, 2019 is well intact. The triangle breakout was observed on the daily chart, which projects the upside target in the range of 11,250-11,300 for Nifty.
As far as support is concerned in the Nifty, it is now shifted upwards to 10,800-odd levels which happens to be its 20 and 200-day SMA which are placed at 10,825 and 10,815, respectively. Bank Nifty has got support at 27,150 and resistance at 27,755.
On the derivatives side also, we have seen long positions being built in Nifty and Bank Nifty Futures during the last week as well as on Monday. FIIs also created fresh longs in the stock futures as well as in the index Options segment during last week. Amongst the Options, put writing is seen at 10,800-10,900 levels.
Considering the technical and derivative evidence discussed above, we believe that, short term trend in the Nifty is still bullish and one should remain optimistic for the market for the coming days.
Therefore, our advice would be to go long in Nifty with the stop loss of 10,800 levels with the targets of 11,250 levels.
Here is a list of top three stocks which could give 7-8% return in next 1 month:
Tech Mahindra Ltd: Buy| LTP: Rs714| Target Rs. 770| Stop-Loss: Rs 680| Return 8%
After taking support around 200-day SMA multiple times during the last couple of months, the stock price reversed northward to close above its 5 and 20-day SMA.
During the last week, Tech Mahindra has given a breakout above the downward sloping trendline, adjoining the high of 03-October 2018 and 05-December 2018 by closing above the 710 levels.
The momentum indicators and Oscillators like RSI and MACD are showing strength on the daily charts. Therefore, we recommend buying Tech Mahindra for the target of 770 and keep a stop loss below Rs 680.
Kotak Mahindra Bank Ltd: Buy| LTP: Rs 1268| Target: Rs 1355| Stop-Loss: Rs 1220| Return 7%
After the announcement of Q3FY19 result, the stock price has broken out on the daily chart with a sharp jump in volumes by closing above the crucial resistance level of 1260.
The stock price also closed above its 20 and 200-day SMA indicating bullish trend for the short to medium-term. Oscillators like RSI is also showing strength on daily charts.
Private sector banks are doing well and look good on the charts for the short-term. Therefore, we recommend buying Kotak Mahindra Bank for the target of 1355 and keep a stop loss at 1220
Biocon Ltd: Buy| LTP: Rs 663| Target: Rs 715| Stop-Loss: Rs 630| Return 8%
After taking support around 600 odd levels multiple times during the last couple of months, Biocon reversed northward to close at a three-month high on Monday.
The stock price has also broken out on the daily chart to close above its crucial resistance level of 660. Oscillators and momentum indicators like RSI and MACD is showing strength in the stock.
The stock price is trading above its 20, 50 200-day SMA indicating a bullish trend for the short to medium-term. Therefore, we recommend buying Biocon for the target of 715 and keep a stop loss below Rs 630.
(The author is Technical & Derivatives Analyst, HDFC Securities)
Disclaimer: 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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