After five weeks of massive decline, the Nifty took some breather and saw a decent pullback during the initial part of the week. However, relentless sell-off in the US markets October 10 and the following day in the Asian bourses had a rub-off effect as Nifty erased all its gain and closed significantly lower on October 11.
The bouts of buying interest from lower levels allowed Nifty to defend the 10,200 mark on a closing basis. The index finally closed around 10,235 shedding almost 225 points from the previous session.
Looking at the daily chart, the price and momentum failed to confirm each other on Thursday which led to a formation of a bullish divergence; hence, the possibility of some pullback from current level can’t be ruled out.
However, the broader trend is clearly down therefore one should not get carried away by such bounces and in fact use such pullback rallies as an opportunity to exit from trading longs and initiate fresh shorts in the index.
As far as the levels are concerned, 10,335 will act as an immediate resistance whereas the Thursday’s high of 10,483 will act as a strong resistance.
On the flip side, 10,110 will act as a near-term support below which Nifty will test its important swing low of 9,952 (Weekly candle low of March 23, 2018).
Here is a list of top three stocks which could give 6-15 percent return in next 1 month:
Glenmark: Buy around Rs 595 – 585| Target: Rs 690| Stop Loss: Rs 545| LTP: Rs 598| Return: 15 percent
On the daily chart, the stock has seen a sharp rally from the bottom of Rs 492 and rallied till Rs 710. Subsequently, it saw a decent profit booking and descend near Rs 574 which coincided with the daily 200-DMA.
Also, the 61.8 percent retracement of its entire swing move from Rs 492 to Rs 710 precisely comes near Rs 574. The daily RSI (14) came near the support level of 40.
Hence, we advocate traders to accumulate this stock in the range of Rs 595 to Rs 585 with a price target of Rs 690. A stop loss should be placed below Rs 545.
Jubilant FoodWorks: Sell around 1,155 – 1,165| Target: Rs 1,025| Stop Loss: Rs 1,225| LTP: Rs 1,146| Return: 10 percent
Looking at the daily chart, the stock has entered into an immediate downtrend after strong outperformance. Of late, the stock has seen a decent pullback and is now approaching towards its 200-DMA.
On October 11, the stock resumed its downtrend and broke the trend line support on lower degree chart. Hence, we recommend traders to go short in this counter in the range of Rs 1,155 – 1,165 with a downside target of Rs 1,025. A stop loss should be placed above Rs 1,225.
SAIL: Sell around Rs 66 – 67| Target: Rs 61| Stop Loss: Rs 70| Return: 6 percent
Looking at the weekly chart, the stock broke the crucial support of Rs 67 during the initial part of the week and corrected till Rs 62. Subsequently, it saw pullback and stock retested Rs 67 which had reversed its role post breakdown and acted as a strong resistance.
Also, the stock had broken the upward sloping trend line drawn from the bottom of around 34. The daily RSI (14) indicates Sail will resume its downtrend.
Hence, we recommend traders to short the stock in the range of Rs 66 to Rs 67 with a price target of rs 61. A stop loss should be placed above Rs 70.Disclaimer: The author Head of Technical Research, Way2Wealth Brokers Pvt. Ltd. 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.