A decisive fall below 10,680 may trigger a bigger correction in the market. On the other hand, resistance is seen at 10,930.
Indian stocks started lower on the back of negative Asian market sentiment on Wednesday. Throughout the session, Nifty remained in the negative zone and fell below the previous session low before closing 117.60 points lower.
On the daily chart, the index formed a ‘Hanging Man’ pattern, followed by a red bodied candle in today’s session which suggests a short-term reversal.
The daily momentum indicator, RSI (14), has entered in a bearish crossover and falling with a current reading of 51.22.
On the options front, maximum open interest position is visible in 11,200 CE (27.96Lakh shares) and 10,500 PE (35.85 Lakh shares); followed by 11,000 CE (26.12Lakh shares) and 10,000 PE (29.42Lakh shares).
Going forward, the market may remain weak. The immediate support for Nifty is seen at 10,680, which is 61.80% of the previous rally from 10,534 to 10,923.
However, a decisive fall below 10,680 may trigger a bigger correction in the market. On the other hand, resistance is seen at 10,930. Sustained trade above 10,930 may induce rally towards 11,100-11,300.
Here is a list of top three stocks which could give 6-11% return in the next 1 month:
Balrampur Chini Mills: Buy| CMP: Rs.104.50 | Target: Rs 114-116.50| Stop Loss: Rs 100| Return 11%
The stock has given a falling trendline breakout which suggests the optimism in the stock has increased significantly and the trend has reversed now.
On the weekly chart, the stock has formed a cup and handle pattern. The daily strength indicator has entered into a positive crossover and rising.
Traders can accumulate the stock in the range of 103–105 for the target of 114-116.50 with a stop loss below 100.
Colgate Palmolive India: Sell| CMP: Rs 1,301.80 | Target: Rs 1,200| Stop Loss: Rs 1,361| Downside 8%
On the daily chart, an engulfing pattern is visible which suggests a short-term pause in the uptrend and possible weakness ahead. In addition, the stock has given a rising wedge breakdown.
Negative divergence in the daily RSI (14) also indicates a correction in the short-term. Traders can sell the stock in the range of 1295-1305 for the target of 1200 with a stop loss above 1361.
Maruti Suzuki India: Sell| CMP: Rs. 7,267| Target: Rs 6,800| Stop Loss: Rs 7486| Downside 6.30%
The stock has given a rising wedge breakdown on the daily frame which signifies a change in the trend. In addition, the price has fallen below the 38.20% retracement level of the previous rally from 6500 to 7949.
The daily strength indicator, RSI (14) is in bearish crossover and falling with a current reading of 40.65. Traders can sell the stock in the range of 7260-7270 for the target of 6800 with a stop loss above 7486.
(The author is a Technical Research Analyst at Bonanza Portfolio)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.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.