By Mustafa Nadeem
The Nifty50 ends down for the third consecutive day to close below 100-days SMA at 10,360. The Nifty has ended down for the third consecutive day which it hasn't done since the first week of January.
BankNifty also ended down to 24870 on the back of rising news of frauds in the domestic banking system that is surfacing since PNB scam was unearthed. The recent scam of Rotomac also added jitters to current developments.
Overall cues for the Indian equity markets remained negative on the back of sentiments that have developed in the last two weeks or so.
A complete underperformance by banking stocks and correction in some of the blue-chips also aided in the current correction. A rise in volatility from 13.5 to 17 levels validates the increasing range of market we may see going forward and directional traders.
The Nifty has closed below its 100-days moving average which is a bearish sign. In the next few days, we may see a trend that may be established since Nifty has respected the 100-days MA last two times it tested it and gave a follow up buying on the underlying trend, i.e. Bullish.
It will be critical to see if buying is returning to the market at lower levels to validate the internal strength. If we see a close below 10350 in next few days then we may be going in for a deeper correction where price may see a downside move to 10100 - 9900.
Though, momentum oscillators suggest an oversold market while it will be all line in the sand for Nifty at 10350 and a weekly close below or above it.
Top four stocks which could give up to 11% return in the short term:
Idea Cellular: BUY| Target Rs93| Stop Loss Rs80| Return 11%
The stock is trading in the oversold zone and is seeing a reversal in terms of the price structure. A double bottom formation at Rs81 odd levels coupled with a pullback in price seen in the last session suggests a short-term bullish structure that can take prices to Rs93. Investors can keep a trailing stop loss at Rs80
Coal India Ltd: BUY| Target Rs330| Stop Loss Rs295| Return 6%
It is one of the outperforming stocks in the oil and gas space which has been in a secular uptrend for the past few months. The recent consolidation seen at Rs290 - 310 levels makes it healthier for next move towards the projected target of 330.
The W pattern along with a flag breakout suggest its overall bullish nature. We suggest buying on dips for the upside target of Rs330 and a stop loss placed at Rs295.
NTPC: BUY| Target Rs175| Stop Loss Rs160| Return 7%
The stock is making a reversal pattern on the higher timeframe charts while a recent base building is seen in the stock on the daily chart with the consolidation of more than a week.
A reversal from the oversold zone can also be seen which can take prices higher in the short term with prices retracing to 175 - 177. We suggest placing a stop-loss placed at Rs160.
Infosys: BUY| Target Rs1190| Stop Loss Rs1110| Return 5%
The stock has breached its upward sloping trendline and ended its recent price correction from 1200 odd levels to 1100.
A retest of the point of polarity at previous breakout levels and a breakout from bullish continuation pattern suggest that it may see next round of bullish levels. We expect the technical target of the pattern at 1190 while stop loss can be placed at the recent bottom of 1110.
Disclaimer: The author is CEO, Epic Research. 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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