The supports for Nifty is seen at 11450 and 11310, and the immediate resistance for Nifty is seen at 11760, followed by 12000 and 12430.
On Monday, Nifty found resistance around its previous all-time high and witnessed some profit booking in the last 45 minutes of the trade. Bank Nifty registered a new all-time high at 30,648 and witnessed profit booking towards 30,200 by the end of the session.
The 13 days-EMA has been acting as strong support for Nifty and BankNifty and that should be followed as a reversal point for taking an overall view on the markets in the short term.
13-days EMA for Nifty and BankNifty is currently placed at 11,450 and 29,600, respectively. The target, for Nifty in the current bull run, could be as high as 12,430, which is 138.2% Fibonacci retracement of the entire swing seen from 11,760 (Aug 2018 High) to 10,004 (Oct 2018 Bottom).
However, this bull run could have running corrections on regular intervals subject to the overbought conditions. We believe that our markets are still not overbought as weekly RSI for Nifty is still at a fair distance from the overbought zone.
As far as sectors are concerned, metals, financial services (NBFC) and infra look promising from here, technically.
The auto sector has been underperformer till date but from here we believe that one should get out from the shorts, as Nifty Auto index is developing the sign of trend reversal from the current levels.
We feel that auto stocks could bounce due to oversold conditions and recoup their losses for the time being. It would be advisable to cut shorts in the largecap auto stocks.
To conclude, markets are not overbought, they are in continuation of a bullish trend. The rally can extend towards new all-time high and beyond.
Running corrections should be bought in to. The supports for Nifty seen at 11,450 and 11,310, and the immediate resistance for Nifty is seen at 11,760, followed by 12,000 and 12,430.
Here is a list of top three stocks which could give 9-16% return in the next 1 month:
Grasim Industries: Buy| LTP: 855.35| Target: Rs 935| Stop-Loss: Rs 820| Return 9.3%
The stock formed a bullish an inverse Head and shoulder pattern, and a Flag breakout is observed on the daily charts. The volumes are rising along with the price breakout. The 20-days EMA has crossed over 50-days EMA, indicating a bullish trend.
Considering the technical evidence discussed above, we recommend buying the stock between the CMP and Rs 835 for the target of Rs 935, keeping a stop loss at Rs 820 on a closing basis.
Tinplate Company of India: Buy| LTP: Rs 158.80| Target: Rs 185| Stop-Loss: Rs 150| Return 16.5%
The stock has reversed northward from the long term support derived from the upward sloping trend line, which adjoins the tops of April 2006 and Jan 2010.
For the month ended Feb 2019, the stock formed a bullish “Hammer” candlestick pattern, and the stock price has recently surpassed the resistance of its 200-DMA. The downward sloping trend line adjoining Jan 2018 and Aug 2018 high is taken out decisively.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at 153, for the target of 185, and keep a stop loss at 150 on a closing basis.
Johnson Controls-Hitachi Air Conditioning India: Buy| LTP: Rs 2,025| Target: Rs 2,280 |Stop-Loss: Rs 1,950| Return 12%
The stock price reversed north from the long-term trend line support on the weekly charts. The stock has broken out from the 6-month consolidation range.
Volume has also started rising along with the price rise. It has reached above its 50, 100 and 200 week-EMAs.
Considering the technical evidence discussed above, we recommend buying the stock at CMP and average it at 1990, for the target of 2280, keeping a stop loss at 1950 on a closing basis.
(The author is Technical and Derivative Analyst at HDFC Securities)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.