Nandish Shah HDFC Securities
The Nifty rose sharply for the second consecutive day in a row to close at 10,583 level. On the last Friday, Nifty surpassed the resistance of its 5-days and 10-days exponential moving average (EMA) for the first time since 1st February 2018.
The Nifty also took support at the upward sloping trend line, which adjoins the bottoms of 28-Sept- 2017, 06th December 2018 and 22nd February 2018.
Last week, the Nifty formed a bullish candlestick pattern known as “Dragonfly Doji” on the weekly charts. This pattern signals indecision among traders.
It is formed when the security's high, open, and close prices are the same. The long lower shadow suggests that the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point. During the first two days of the March series, we have seen a buildup of long positions in the Nifty Futures’.
We have started new series with a 5 percent lower Open Interest (OI) in stock futures. The OI is the lowest in 3 months which makes it very light and gives us the confidence to say that the Nifty will do better than the last series.
For the short term, Nifty may find strong support around 10450-10500 level, where Puts have been written. To conclude, our advice would be to remain long with the stop loss of 10450 level.
The immediate resistance for the Nifty would be in the range of 10700-10750
Here is a list of top 3 stocks which could give up to 8% return in the short term:
HCL Infosystems Ltd: BUY| Target Rs. 68 | Stop-loss Rs 60| Return 8%
The stock is on the verge of giving the highest monthly close since November 2015. The stock price has given an ‘Ascending Triangle’ breakout on the monthly charts by closing above 54 level indicating primary uptrend.
The stock price is trading above its 20, 50, 100 and 200-DMA, which indicates bullish setup for medium to long term. Oscillators and momentum indicators are showing strength in the medium and long-term charts.
The recent price fall of 10 percent seems to be a running correction in overall bullish trend. We recommend buying HCL Infosystems for the upside target of Rs68, and a stop loss below Rs60.
Tata Global Beverages Ltd: BUY| Target Rs290 | Stop-loss Rs260 | Return 6%
The stock has made a Bullish Trend Reversal from the support of the long-term trend line. It has closed above its 5-days EMA Resistance.
The RSI has formed a positive divergence on the daily chart, which indicates selling momentum is slowing down and a rise in trend reversal is on the cards.
The stock has been an outperformer for last 1 year and holds bullish trend on the monthly chart. We believe this recent fall of 20 percent from high is a good buying opportunity for the short term. We recommend buying Tata global for the upside target of 290, keeping a stop loss below Rs260.
Century Textiles: BUY| Target Rs. 1300| Stop-loss Rs 1170| Return 6.60%
Century Textiles reversed northwards after forming a Double Bottom around Rs1150 level to close above 5-DMA of Rs1180 level.
The stock price has made a Bullish trend reversal “Doji” pattern on the weekly charts. The RSI has formed a positive divergence on the daily chart indicating that the selling momentum could be slowing down which could lead to a trend reversal.
The recent price fall of 17 percent seems to be a running correction in overall bullish trend. On the higher side, the stock will face resistance around Rs1,300 which was the recent high. We recommend buying Century Text for the upside target of 1300, and a stop loss below Rs1170.
Disclaimer: The author is Senior Analyst - PCG, 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.
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