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Last Updated : Feb 08, 2018 09:12 AM IST | Source: Moneycontrol.com

Use rallies to short Nifty; 4 stocks which can give up to 17% return

If Nifty manages to hold 10,270 levels, we may expect the index to consolidate. The immediate and strong hurdle for Nifty is placed around 10620, and any close above the same will lead to strong short covering in the index.

 
 
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By Rohit Singre

Bonanza Portfolio Ltd.

The index closed the day at 10476.7 on Wednesday with a minimal loss of 21.55 points after a volatile session and formed a bearish candle pattern on the daily chart.

The index has corrected nearly 7 percent from the recent highs and is currently trading near its strong support. The index has immediate support placed at 10360 which is its 100-DMA and below that 10270.

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If Nifty manages to hold 10,270 levels, we may expect the index to consolidate. The immediate and strong hurdle for Nifty is placed around 10620, and any close above the same will lead to strong short covering in the index.

On the options front, highest open interest is placed at 10000 PE followed by at 10500 PE so 10,000 will act as a strong support in the month of February and on the higher side 11500 CE has highest open interest followed by 11000 CE.

In the recent past, we have witnessed long unwinding along with short built up in Nifty suggesting bears are having control at the moment.

We expect volatility to extend further and one need to trade with strict stop losses as it is a buy on the dip and sell on rising market for near term.

Currently, the index has strong resistance at 10620. Traders can initiate shorts on every rise with keeping a stop loss above 10620 and immediate support formed near 10270 so these level can be used as buying stop loss on the downside.

Here is a list of four stocks which can give up to 17% return in short term:

Eicher Motors: BUY | Target Rs 30900| Stop Loss 26100| Return 11%

The stock is trading in a rising channel pattern on the weekly charts. The stock has corrected recently from the higher band of the channel. Currently, the stock is hovering near the lower band of the channel. We have witnessed strong buying activity on lower levels.

Also, the stock has formed AB=CD bullish pattern on the daily charts and is also trading in positive divergence on the daily chart which suggests that near-term bottom has formed and the stock is all set to fly northwards.

Considering technical setup, one can initiate a buy call on the stock at current levels to any dip near 27100 for the target of 29900-30900 and a stop loss below 26100 on a closing basis.

Godrej Consumer: BUY | Target Rs 1130 | Stop Loss Rs 970| Return 12%

In the recent fall, the stock has corrected from its lifetime high of 1128. It took support at 78.60% retracement support from the previous low of 970.

On the monthly chart, the stock is trading supper uptrend forming higher top higher bottom formation with good volume. On the daily chart, the stock is trading near previous breakout zone and trying to move higher as volume going up day by day.

The momentum traders can take a position in the counter at current levels to any dip near 900 for the targets of 1130 and a stop out level can be kept below 970 on a closing basis.

JM Financial: BUY | Target Rs 190 | Stop Loss Rs 140 | Upside 17%

The stock is trading in a strong uptrend since long and the recent correction from the top can be considered as a healthy correction because it has taken support at 68.20% retracement zone from August low.

In the recent fall, the stock recovered quickly after touching the same previous low and moved again above all strong DMA’s showing strength. On the higher side, the immediate hurdle is seen at 171 levels crossing above the same we may expect 180 levels.

Traders can initiate a long call on the stock at current levels to any dip near 150 for the target of 170 & 190 with keeping a stop loss below 140 on a closing basis.

TNPL: BUY | Target Rs 490 | Stop Loss Rs 375 | Upside 15%

After making high at 499, the stock corrected to make low of 365 but managed to bounce back from the same level which is 78.60% retracement zone from the previous low of 318.

If we observe weekly chart, the stock has again taken support at previous breakout zone of 390 and bounce sharply. On the daily chart, the stock took support at 200-100 DMA’s and rose.

Momentum indicator RSI also showing positive divergence on the daily chart.

Considering above technical setup and a strong pullback in counter, Momentum Traders can take the position at current levels to any dip near 400 for the targets of 490 stop out levels can be kept below 375 on a closing basis.

Disclaimer: The author is Senior Research Analyst, Bonanza Portfolio 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.

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First Published on Feb 8, 2018 09:11 am
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