Abhishek MondalGuiness Securities
The Nifty has taken a breather after two-days of gains and closed below the physiological 11,400 level. After a flat start, the index traded lacklustre throughout the session and managed to close marginally higher (0.02 percent) at 11,389.45 due to defused fears over US–China trade tensions.
At present, the index is looking exhausted at higher levels. Overall, it looks overstretched and has formed a ‘Tweezer Top’ kind of pattern on the daily scale, which indicates some sort of consolidation in the near term.
Immediate support for the Nifty is seen around 11,326 (10-day daily moving average) and 11,223 levels (23.6 percent retracement levels of June to August upmove), whereas 11,486 (Daily Upper Bollinger band) will act as stiff resistance for the index.
The relative strength index (RSI) on the daily chart is 71.05. The index is trading in the overbought zone and the daily moving average convergence divergence (MACD) is signalling a bullish stance. The volatility index ended up 0.12 percent at 12.57. An advance in VIX suggests mild (intraday) volatility may be seen in upcoming trading sessions.
On the options front, maximum call open interest of 38.77 lakh contracts is seen at 11,500 strike, followed by 11,400 strike, which now holds 28.45 lakh contracts. Maximum put OI of 51.29 lakh contracts is seen at 11,000 strike, followed by 11,200 strike, which now holds 42.55 lakh contracts. Immediate support is seen around 11,200 and 11,000 levels, whereas 11,400 and 11,500 will act as an immediate hurdle in this expiry.
Here is a list of top three stock ideas that could return 6-14% in the next one-month:
The India Cements Ltd: Buy| Close: Rs 121.90| Target: Rs 145 | Stop Loss: Rs 110 | Return: 14.85%
After marginal consolidation, the stock has given a breakout above Rs 118-119 levels on the daily scale with higher volumes. The daily momentum indicator, Relative Strength Index (RSI) reads at 62.45 levels, which is showing positive momentum.
The MACD is also trading above the zero line with positive crossover, suggesting consolidation phase is over in the stock. Traders can buy the stock in the range of Rs 120-122 with a stop loss below Rs 110 (closing) for a target of Rs 140.
Exide Industries Ltd: Buy| Close: Rs 285 | Target: Rs 320 | Stop loss: Rs 260 | Return: 12.28%
On the daily scale, the stock has been trading in an uptrend where price is making higher highs and higher lows with moderate volumes.
Moreover, the stock has been continuously trading above its 21-days moving average which is placed at Rs 271 levels.
The key technical indicators Relative strength index (RSI) showing positive momentum and MACD is trading above zero line with positive crossover whereas (+)
DI trading above (-) DI, which indicates limited downside in the stock.
Based on the above observations, traders can buy the stock in the range of Rs 283-286 with a stop loss below Rs 260 (closing) and a target of Rs 320
Muthoot Finance Ltd: Buy | Close: Rs 420.10| Target: Rs 449 | Stop loss: Rs 399 | Return: 6.88%
The stock has given a break-out above its downward trend line around Rs 417-418 levels on Monday with higher volumes on the daily chart.
A daily momentum indicator Relative Strength index (RSI) reading at 58.52 levels, making higher top and bottom whereas MACD is trading above zero line with positive crossover and OBV — On Balance Volume is showing an upward momentum, which indicates some fresh upmove expected in this stock.
Traders can buy the stock in the range of Rs 418-421 with a stop loss below Rs 399 (closing) for a target of Rs 449.
Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on Moneycontrol are his own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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