Vinay Rajani
The Nifty50 has been rising for the last four sessions and recovered more than 300 points from the low of 10,585 to 10,887 till date. The index formed a bullish double bottom on the daily charts at 10,585 levels.
A double bottom pattern is more like a trend reversal sign for the short term. Any level below 10,585 would violate the chances of holding the medium term uptrend in the Nifty.
On the upside, there is a stiff resistance placed at 10,860 levels, which happens to be the 200 DMA for the Nifty. The Sensex has been trading in the rising channel on the daily charts.
On February 19, 2019, Sensex found support exactly on the lower line of the upward sloping channel. The closing bottom registered on that session is 35352, which is expected to act as strong support going forward.
The Nifty Mid-cap and Nifty Small-cap indices have been outperforming recently, as they have surged 3.65 percent and 4.75 percent, respectively, from the bottom formed on February 19, 2019.
The breadth of the market has improved significantly in the last 5 days. For the last many months, the performance gap between large-cap and the small-cap indices had widened with a big margin.
Our advice would be to use decline to accumulate long positions with a stop loss below 10,700 levels. On the higher side, Nifty is likely to find resistance in the vicinity of 10900-11000 level where Calls have been written throughout the series.
We expect Nifty and Sensex to consolidate with positive bias in the coming days. However, Midcap and Smallcap are expected to continue with the pullback rally from here.
Here is a list of top three stocks which could give 8-10% return in the short term:
HCL Technologies: Buy| LTP: Rs 1,083.50| Target: Rs. 1,190| Stop-loss: Rs 1,026 | Upside 10%
The stock price has given a breakout from the bullish “Flag” pattern on the daily charts, which indicates a continuation of the primary trend which is on the upside.
The stock is a few percentages away from making a new all-time high above Rs 1125. I.T sector has been the biggest contributor in maintaining the strength in the Nifty. Moving average and Oscillator setup is bullish on daily and weekly charts.
Considering the technical evidence discussed above, we recommend buying the stock between CMP and Rs 1050 for the target of Rs 1190 and keep a stop loss below Rs 1026 on a closing basis.
SRF: Buy| LTP: Rs 2,243| Target: Rs 2,445| Stop-Loss: Rs 2,155| Upside 10%
The stock price has given a breakout from bullish “Flag” pattern on the daily charts, which indicates a continuation of a primary uptrend.
The stock has been forming higher tops and higher bottoms on the daily charts. It has moved past above all important moving average parameters. Indicators and oscillators have also turned bullish on the short to medium term charts.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at Rs 2180, for the target of Rs 2445, and keep a stop loss below Rs 2155 on a closing basis.
Torrent Pharma: Buy| LTP: Rs 1,812|Target: Rs 1,962 |Stop-Loss: Rs 1,710| Upside 8%
The stock has resumed its uptrend after 5-weeks of price correction. The primary trend of the stock has been bullish with higher tops and higher bottoms on the weekly as well as on the monthly charts.
In August 2018, the stock broke out from the long-term consolidation pattern on the monthly charts by surpassing the crucial resistance of Rs 1770 on a closing basis.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at Rs 1760, for the target of Rs 1962, and keep a stop loss below Rs 1710 on a closing basis.
(The author is Technical Analyst at HDFC Securities)
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