Dharmesh Shah
The Nifty on the weekly chart formed a sizable bull candle carrying a higher high-low, indicating strong positive bias as the index resolved out of five month’s consolidation.
The index continued with its positive momentum in the current week as it gained from strength to strength and extended the rally.
Above average volumes suggest a continuance of positive momentum, auguring well for further acceleration of momentum which could take Nifty towards 11,400.
However, the last seven sessions' sharp up move (575 points) hauled stochastic oscillator in overbought territory (at 96), suggesting a couple of days breather cannot be ruled out.
As the structure remains firmly positive any breather will provide a fresh buying opportunity.
The Nifty midcap, smallcap indices continued to outperform. The last four weeks' up move helped Nifty smallcap index to completely retrace its preceding nine weeks' decline.
In the process, the midcap index retraced more than 90 percent. The faster pace of retracement signifies structural turnaround, boding well for the next leg of the up move.
Correspondingly, the empirical evidence suggests that both indices have not corrected for more than 14 months each since inception.
In the current scenario, as Nifty Midcap index bounced from the long-term 200-weeks EMA along with 14-months correction behind us, we believe both indices are approached their price-wise, time-wise correction maturity.
Here is a list of top three stock which could give 7-17% return in the next 1-6 months:
PVR: Buy| LTP: Rs 1,620| Target: Rs 1,805| Stop Loss: Rs 1,497| Upside 11%| Time Frame 6 months
The share price of PVR Limited has formed a higher bottom around Rs 1,430 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 the lifetime highs of Rs 1665 in the coming weeks.
The short term support for the stock is placed around 1500 levels as it is the confluence of 61.8% retracement of the current up move Rs 1431 to 1658 and the 100-days EMA placed around Rs 1500 levels.
We expect the stock to resolve higher in coming months and head towards Rs 1805, which is 123.6% retracement of entire decline during April 2017 – July 2018 (1655-1062)
Canara Bank: Buy| CMP: Rs 263| Target: Rs 280| Stop Loss: Rs 245| Upside 7% Time Frame 14 days
The share price of Canara bank is at the cusp of trend line breakout joining the highs of October 2017 (464) & January 2019 (290) signalling a positive bias and offers a fresh entry opportunity to ride the next up move in the stock.
The stock has recently rebounded after forming base near the October 2018 low (210), thus forming a potential double bottom at the 80 percent retracement of entire up move from (152-464) highlighting improving price structure
The stock has immediate support is placed at Rs 245 as it is 38.2% retracement of the current up move from Rs 213 to 263.
Among oscillators, the weekly 14 periods RSI has generated a bullish crossover above its nine-period average, thus supporting the positive bias in the stock.
We expect the stock to continue its current up move and head towards Rs 280 being 80 percent retracement of the previous decline seen from August-October 2018 from | 302 to 205 in the coming weeks
Narayana Hrudayalaya: Buy| CMP: Rs 224| Target: Rs 262| Stop Loss: Rs 199|Upside 17%| Time Frame 6 months
The share price of Narayana Hrudayalaya resolved out of its 10-week’s base formation poised at the lower band of the falling channel supported by strong volume traction, resulting in higher high-low formation (along with monthly positive close) for the first time in the last six months, signifying termination of corrective bias. Hence, it offers a fresh entry opportunity with a favourable risk-reward.
The ongoing structural improvement makes us believe that one should accumulate the stock at current levels. The stock has major support at the 61.8% retracement of the current up move (183 – 224) placed at 199 levels.
We expect the stock to rally towards 262 as it is 38.2% retracement of the last two years decline (379–183), placed at 258 coinciding with an upper band of falling channel placed around 255 levels and an identical high of August and November 2018 at 265.
(The author is Head Technical, ICICI Direct.com Research)
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