Shitij Gandhi
Bulls seem to be losing control and bears are taking charge over the markets as once again Nifty indices not just slipped below its 200-days exponential moving average but also slipped below 10,600 mark on an intraday basis this week on the back of selling in heavyweights like TCS, Infosys & HDFC twins.
From the derivative front, call writing was observed at 10,800 and 10,900 strikes along with put unwinding at 10,700 and 10,800 strikes.
This clearly signifies that market depth has tilted towards sellers and any upside in the index may likely to remain capped.
On the technical front, 10,700-10,750 zone will act as crucial resistance while 10,500 levels should act as immediate support for Nifty moving forward.
The current trend is likely to remain bearish for the index with some stock specific action and volatility on cards.
Here is a list of three stocks which could give 9-12% return in the next 1 month:
Power Finance Corporation: Buy| Target: Rs 115| Stop Loss: Rs 100| Upside 9%
On the daily charts, the stock has been trading in a downward sloping channel and trading with the formation of the lower high and lower bottom after testing 110 levels in recent past.
This week we have observed a fresh breakout in prices above the falling trend line along with positive divergences on secondary oscillators.
Additionally, the stock has also managed to close above its 200-days exponential moving average (EMA) on the weekly interval which is again a bullish signal for the stock.
So, traders can accumulate the stock in a range of 105.50-107.50 for the upside target of 115 levels with a stop loss below 100.
Dalmia Bharat Sugar and Industries: Buy| Target: Rs 112| Stop Loss: Rs 94| Upside 12%
The stock has been maintaining above its long-term moving averages and has been trading in a range of 88-100 from last more than one month.
However, on the broader charts as well the stock has formed a W pattern along with double bottom which signifies limited downside in prices moving forward.
So, traders can accumulate the stock in a range of 100-102 for the upside target of 112 levels and a stop loss below 94.
ICICI Lombard General Insurance Company: Buy| Target: Rs 1022| Stop Loss: Rs 860| Upside 11%
After taking support at its 200-days exponential moving average (EMA) and is forming a double bottom pattern around 810 levels on a daily interval, stocks took V-shape recovery and once again reclaim 900 levels.
On the broader charts, as well the stock has been consolidating in range of 820-920 levels from last two months. We believe the breakout after the prolonged consolidation can trigger fresh buying into the stock which could move price higher towards new highs.
So, traders can buy the stock above a breakout level of 920 for the upside target of 1022 levels and a stop loss below 860.
(The author is a Senior Research Analyst, SMC Global Securities)
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