The Indian equity market traded volatile within rangebound levels during the truncated week and continued to remain sideways without major direction last week.
It failed to sustain upward momentum of the week before as weak auto sales continued in April coupled with mixed Q4FY19 earnings dented sentiments.
Further, the sentiment remained globally weak after US Fed signaled no ‘rate-cut’ in near-term. Overall, the downside was capped as crude oil price took a breather to trade at $70 levels after reaching $75 odd levels.
During the week under review, the Nifty index despite slipping below its psychological level of 11,700 levels it managed to rebound at a later session. The Nifty index closed weekly session at 11,712.25 levels, down by about 0.4 percent on a weekly basis.
The Nifty index formed a small bearish candlestick pattern on weekly price chart while it formed ‘doji’ kind of pattern for consecutive period daily price chart indicating indecision, among traders.
However, the momentum indicator continued to signal a positive divergence with its weekly RSI 67-odd levels and MACD continued to trade above its signal line.
The weekly resistance for the index is now seen at 11,850 levels while support is placed at 11,550-11,480-odd levels.
Expectations from the week:
The Indian equity market is expected to remain largely in a sideways direction as we approach the election outcome.
Further, a sudden surge in crude oil price on supply constraint due to end of sanction waiver and depreciation in rupee is likely to pose challenges for Nifty index to break above earlier high-level.
We continue to remain focused on selective opportunities only for long-position and expect a rangebound target on a weekly basis at 11850 levels on upside and 11480 levels on the downside.
Here is a list of top three stocks which could give 3-5% return in the next 1 month:
Jindal Steel & Power: Buy| Target: Rs 191| Stop-Loss: Rs. 172| Upside: 5%
Despite a weak market breadth, Jindal Steel traded in a positive trajectory for a consistent period and managed to close above its 200-days moving average placed at 175 odd levels on closing basis.
The scrip also breakout from its upper resistance of Rs 180 odd levels with strong volume support during the same period.
The scrip also made a healthy correction from a high of Rs 191 levels and took strong support at 166 odd levels to reserve the trend upward. The scrip formed a bullish candlestick pattern on both weekly and daily price chart along with volume.
The momentum indicator also outlined a positive divergence in price with weekly RSI at 56 odd levels coupled with MACD making a bullish crossover to trade above its Signal-Line on a weekly scale. We have a BUY recommendation for Jindal Steel which is currently trading at Rs. 181.75
Kotak Mahindra Bank: Buy| Target: Rs 1475| Stop-Loss: Rs 1345| Upside: 4%
Kotak Mahindra Bank continued to trade in positive trajectory for six straight sessions despite weak market breadth and managed to break out from its swing-high of 1390 odd levels on closing basis.
It also managed to surpass its short-term hurdle of 20-days moving average placed at 1362 odd levels, and with strong support placed at 1340 odd levels.
Backed by volume growth on a weekly scale, the scrip formed a bullish candlestick pattern for a consecutive period on the weekly chart.
The momentum indicator outlined a positive divergence in price with weekly RSI at 70 odd levels and MACD trading above its Signal-Line. We have a BUY recommendation for Kotak Bank which is currently trading at Rs. 1417.80
Biocon: Sell| Target: Rs 534| Stop-Loss: Rs 570| Downside: 3%
Biocon witnessed a strong selloff after remaining in sideways direction for over one month and continued to trade in negative trajectory for about two weeks.
The scrip slipped below its crucial support of 200-days moving average placed at 612 odd levels, and currently, it trades below all the moving average on a daily scale.
The scrip formed ‘long’ bearish candlestick pattern on the weekly chart indicating persistent selling pressure at a higher level and formed a bearish pattern on the daily scale for consecutive sessions.
The momentum indicator continued to outline a weak trend with RSI at 34 odd levels coupled with MACD making a bearish crossover to trade below its Signal-Line. We have a SELL recommendation for Biocon which is currently trading at Rs. 551.05.
(The author is Founder & CEO, 5nance.com.)
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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