Broader market resumed up move in the last six sessions after forming a higher base at the support area. The Nifty Midcap and Smallcap has recorded faster retracement, signifying inherent strength.
The weekly price action formed a strong bull candle, which settled above the previous week high wave candle indicating a continuation of the positive momentum.
The across sector participation supported by improving the market breadth and above average trading volumes signifies inherent strength of the market.
However, after the recent strong up move of more than 11 percent in the last six weeks on the daily and weekly stochastic has entered overbought territory (at 95) along with negative divergence on the daily RSI oscillator, suggesting impending breather near the all-time high (11760) is likely in the coming week.
We expect the index to consolidate in the broad range of 11,800-11,400 with stock-specific action as we are entering into Q4 FY19 earning season.
The broader market resumed up move in the last six sessions after forming a higher base at the support area. The Nifty Midcap and Smallcap has recorded faster retracement, signifying inherent strength.
We believe, the higher base formation has helped to cool off the overbought condition, in turn making market healthier. Thus, we recommend investors accumulate quality stocks
Here are two stocks that could give 9-17% return in the 1-6 months:
PVR: Buy| LTP: Rs 1657| Target: 1805| Stop Loss: Rs 1555| Upside – 9%| Time Frame 6 months
The share price of PVR Limited has formed a higher bottom around Rs 1430 during February 2019 which validates the change of polarity principle as May-November 2018 resistance now reverses its role as support.From a structural perspective, the current up move augurs well and reinforces positive stance for an impending breakout above life-time highs of 1665 in the coming weeks
The short-term support for the stock is placed around 1555 levels.
We expect the stock to resolve higher in coming months and head towards 1805, which is 123.6% retracement of entire decline during April 2017 – July 2018 (1655-1062).
Kansai Nerolac Paints: Buy| LTP: Rs 467| Target: Rs 550| Stop Loss: Rs 405| Upside – 17%| Time Frame 6 Months
The share price of Kansai Nerolac Paints is at the cusp of a falling channel breakout containing entire decline since high of Dec’17 (614) signalling a reversal of the secondary corrective trend and offers fresh entry opportunity for the next leg of the up move.
The stock has already taken 15 months to retrace just 80% of the previous 12 month’s up move from 319 to 614, a slower retracement of the previous major rising segment signals positive price structure and indicates strength.
The short term support for the stock is placed around 405 levels as it is the 61.8% retracement of the previous up move 343 to 499.
We expect the stock to resolve higher in the coming months. The favourable risk-reward set-up offers a fresh entry opportunity for upside toward 560 as it is 80% retracement of the entire decline (614 to 343).
(The author is Head Technical at ICICI Direct.com Research)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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