There could be a running correction but overall we believe that the support of 10,300 in Nifty could not be violated in the November month.
The Nifty50 climbed more than 5 percent last week, resulting in the biggest weekly gain since May 27, 2016.
From the bottom of 10,004 registered on October 26, Nifty has risen more than 6 percent to 10,606 till last week. The previous top on the Daily charts is placed at 10,710, which can act as an immediate resistance for the index.
The 200-DMA is placed at 10,765, which could also act as a hurdle in the short term. If we were to draw a downward sloping trend line, adjoining the daily highs of September months, both Nifty and Sensex are placed almost at that trend line resistance.
It is crucial for Nifty to surpass the 10,600 resistance on a closing basis. However, there has been a development of positive divergence on the daily RSI Indicator, where Nifty formed a new bottom and the RSI made a higher bottom in October end.
The MACD indicator has been also showing strength on the daily charts. The Nifty is now sustaining above its 20-DMA and that is why support is shifted upwards to 10,335, where 20-DMA is currently placed.
As far as BankNifty is concerned, 25,900 to 26,050 range is likely to act as stiff resistance, and above which gains could extend up to 27,150 levels. Support for the BankNifty is seen in 25,000-25,200 range.
On the derivative front, the stock future open interest was at a 14-month low in the start of the November series which indicates lower leveraged positions.
Our study dating back to the times when Derivatives were initiated in India shows that if the Nifty's loss in two consecutive series is more than 10 percent, then the third series has closed higher in 11 out of 12 times in the history.
The Nifty fell 14 percent in the September and October series put together.
To conclude, the market seems to have bottomed out for the short-term. There could be a running correction but overall we believe that the support of 10,300 in Nifty could not be violated in the November month. The resistances for the Nifty are seen at 10,605, 10710 and 10,765.
Here is a list of top three stocks which could give 9-15% return in the next 1 month:
Sterlite Technologies Ltd: Buy| LTP: Rs 364| Target: Rs 420 | Stop-Loss: Rs 340 | Return 15%
Primary trend of the stock has been bullish with higher tops and higher bottoms formation seen on daily charts. The stock recently surpassed its crucial resistance of 365 and broke out from the long consolidation of previous 10-months in October 2018.
The stock has remained resilient in the entire downswing in the mid-cap space during the last 10 months. Quarterly results were impressive which signals positive sentiment.
The all-time high is for the stock is placed at Rs 415 and the stock is trading at a discount of 10 percent from this price, which we expect to be taken out in the near future.
Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of Rs 420 and keep a stop loss below Rs 340 on a closing basis.
Torrent Power Ltd: Buy| LTP: Rs 265 | Target: Rs 290 | Stop-Loss: Rs 248 | Return 9%
The stock has recently surpassed its 200-DMA resistance. It formed a strong bottom formation at Rs 215 odd levels in the last 8-10 months.
The moving average and oscillator setup has been bullish for the last many days. The company posted excellent results recently, and the power sector has to witness a positive traction recently.
Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of 290 and keep a stop loss below Rs 248 on a closing basis.
Coromandel International Ltd: Buy| LTP: Rs 430 |Target: Rs 475| Stop-Loss: Rs 405 | Return 10%
The stock price has reversed the trend from the crucial long-term support of previous tops, registered in 2010, 2011 and 2014. This support is at 350 odd levels.
The stock saw a bullish Hammer candlestick pattern on the monthly charts which indicates a trend reversal. The long-term primary trend is bullish with higher tops and higher bottoms.
Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of 475 and keep a stop loss below Rs 405 on a closing basis.Disclaimer: The author is Technical Analyst, HDFC securities. 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.