Mustafa Nadeem
Epic Research
The Nifty50 rallied on Monday and came closer to 10,400 level making a new all-time high at 10,384, but pared gains and closed with minor gains at 10,363.
The Nifty50 continued to be moving in an upward momentum on the back of positive global and domestic cues. Buying was noticed across sectors except IT, Metal and Realty which observed some profit booking.
A shooting star pattern is observed on the daily charts which signal exhaustion, as well as loss of breadth in the market. Now, a follow-up buying is needed to nullify, else we may see some profit booking in the near-term since it is a reversal pattern.
A Shooting star is formed in an uptrend with upper shadow at least twice as big as the real body while the color of the body, bullish or bearish, is less important.
The immediate resistance on Nifty is now placed at 10,400 odd levels which is needed to be taken out in the follow-up buying.
The support levels have now shifted to 10300 - 10320 levels. On an immediate basis, support is seen at 10,300 and if we see a breach on Tuesday especially in early hour session then a reversion to 10250 - 10200 is very much on the cards.
The structure of the overall higher top and the higher bottom formation is in place and in the short-term, the trend is intact since we are above short-term moving averages like 20, 50 and so on.
As per OI data, the broader range for the market is placed at 10,200 – 10,400 and the Nifty have multiple resistances levels placed at 10,400 as per indicators study.
A breach of the same would ensure the uptrend albeit we may see a mild profit booking if that doesn't happen in the coming days.
The current buying momentum was largely contributed by some select bluechip stocks like RIL, ITC, ICICI, TATA Motors, Maruti and so on along with banking sector.
It will be crucial to watch these stocks as they will give a further indication to overall momentum. FII activity in last few days has shifted to Index options while some unwinding is observed in Index futures.
Here is a list of top five stocks which could give up to 11% return in the short term:
Delta Corp: Target Rs285| Stop Loss Rs248| Return 10.4%
The stock is looking strong on the daily chart as it closed near its 52-week high level. A higher top and higher bottom formations are in place with the stock going through some minor consolidation.
The consolidation which is observed on the chart is forming almost a flag pattern which is a bullish continuation pattern.
As per the indicator based study, the RSI (74) and CCI (150) is also looking extremely bullish on the daily chart and may continue to be in the same direction with the stock reaching new highs.
We recommend buying for next 2-3 session with a target of 285 with the stop loss of 248.
Mastek: BUY| Target Rs405| Stop Loss Rs338| Return 10%
The stock was up around 9 percent on Monday with heavy volumes. It has also breached its previous 3-months high level.
On higher timeframe, it is coming out of a strong bullish pattern formation, W, and signals the upward move to be in continuation with prices shifting its trading range.
We see more potential in the stock to break its previous 52-weeks high resistances in the coming days. We recommend buying from current level for the target of Rs405 with a stop loss placed at Rs338.
Titan Company: Target Rs640| Stop Loss Rs600| Return 3.5%
The stock has given a breakout on the daily charts as it has come out of long consolidation. The stock has taken support near its 100-days MA signaling a short-term upmove.
A retest of 100-days MA along with a breakout from the consolidation pattern with higher volume indicates that it may see further buying interest.
The overall trading pattern of the stock indicates a channel formation which may be breached given a divergence in price and indicator.
We expect Titan to perform well with an upside to 640 zones while stop-loss can be placed at 600
Bata India: BUY| Target Rs860| Stop Loss Rs800| Return 4.7%
The stock is in a secular bull run with higher top and higher bottom formations. After a recent consolidation and correction, it has given a new breakout on all time frames.
A retest of short-term moving averages along with closing above it indicates that the undertone is very bullish. It has also seen a fresh crossover of 10 and 20-days MA indicating a short-term base formation to be in place.
We expect Bata India to perform well and continue the upmove with the possible target placed at Rs860 and stop-loss placed at Rs800.
UFO Moviez: BUY| Target Rs470| Stop Loss Rs380| Return 11.6%
It has recently breached its downward sloping resistance trendline drawn from peaks of Q1-2016. A lower top-lower bottom formation has been reversed to higher bottom and higher bottom signaling the reversal of intermediate trend to positive as against negative previously.
It has seen a crossover, positive, on daily as well as closed above crucial resistances on the weekly chart. We expect this reversal to be in place and sustain the move. Traders can buy for the target of Rs470 and a stop loss of Rs380.
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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