A broker looks at a terminal while trading at a stock brokerage firm in Mumbai November 6, 2008. Indian shares fell 3.8 percent on Thursday to their lowest close in a week, caught in a broad global sell-off on fears of a deep U.S. recession, while higher-than-expected inflation data added to the pain late on. REUTERS/Arko Datta (INDIA) - RTXABJW
The Nifty closed around its crucial level of 9,200 and chances of further down move towards crucial support levels cannot be ruled out in the holiday-shortened week. The market will now give investors multiple entry points which investors should not miss.
The Nifty has hit a new all-time high in the truncated week gone by, but consolidated throughout the week as traders preferred to book profits at higher levels. The Nifty closed the week marginally lower and made a ‘Shooting Star’ kind of pattern on charts which is a reversal pattern; hence investors should tread with caution.
"Most of the market participants and investors are demonstrating caution in such fizzy market and waiting for a correction to re-enter the bullish Indian story at fair valuations. This strategy is similar to the one which is used in IPL by a batting team to score a good total on the board," Rajesh Shanbhag, Advisory Head - Alternate Channels, Way2Wealth Brokers Pvt. Ltd told moneycontrol.
"Here, the scoring batsman waits for loose bowling spells to score the most. But while using such a strategy investors should be aware that whenever markets will correct it will come with a nasty reason which can be termed as a bouncer delivery in form of poor monsoon, poor earnings or geopolitical tensions. This bouncer delivery rather events must be played carefully if you are not hungry of scoring fast returns,” he said.
The best strategy for investors is to buy quality stocks on dips on any correction towards 9000, suggest experts. We have collated a list of top 5 stocks which can give up to 7 percent return in the short term.
Analyst: ICICI Securities
Deepak Nitrite: BUY| Target Rs 145| Stop Loss Rs 117.50| Upside 7 percent
The share price of Deepak Nitrite is at the cusp of registering a breakout above the neckline of rounding pattern placed around Rs 131 levels.
A rounding formation within an uptrend is considered a bullish continuation pattern, which marks a healthy corrective phase as prices work off the overbought conditions developed after a strong rally before the resumption of the primary uptrend.
The base of rounding pattern is anchored upon the long term rising 52 weeks EMA, then placed around Rs 92 levels. The stock tested the neckline of the rounding pattern in the first week of March 2017 and then consolidating just below the neckline level over the past four weeks.
The brokerage firm believes that the bullish consolidation at the breakout area provides fresh entry opportunity for short-term traders to ride the next up move.
Analyst: Sameet Chavan, Technical Analyst at Angel Broking
Bajaj Auto: BUY| Target Rs 3,030| Stop Loss Rs 2748| Time 14-21 sessions| Upside 7 percent
“We have been quite upbeat on this stock since last three weeks; however, the stock has done nothing in terms of price appreciation. In fact, we witnessed a gradual corrective move after posting a near-term high of Rs 2948.70,” said Chavan.
Despite this, the broader degree chart structure still remains robust as we construe this down move as a pull back towards the ‘Downward Sloping Trend Line’. This level coincides with two key moving averages such as the ’89 EMA’ as well as ‘200 SMA’ on daily chart.
Going by these evidences, we expect the completion of corrective phase soon. Chavan advises traders to buy this stock at current levels to a decline up to Rs.2780 for a target of Rs.3030 over the next 14 to 21 sessions. The stop loss should be fixed at Rs 2748.
M&M: BUY| Target Rs 1,354| Stop Loss Rs 1,254| 5-10 sessions| Upside 6 percent
Of late, a clear underperformance from this stock was seen as compared to some of its peer counters. Now, looking at the daily chart, it appears that the stock has managed to find a support around the 50 percent Fibonacci retracement of the recent up move from Rs.1177.35 to Rs.1361.
This level coincides with the multiple technical indicators such as the daily ’89 EMA’ and the weekly ‘Super Trend’. Hence, we interpret this as a completion of the corrective move and expect the stock to give a decent up move quite soon.
On the hourly chart, we are witnessing some early signs of this move as the stock prices are showing positive traction along with decent volume activity.
Considering the above technical evidence, Chavan advises traders to buy this stock at current levels to a decline up to Rs.1270 for a target of Rs.1354 over the next 5 to 10 sessions. The stop loss should be fixed at Rs.1254.
Source: SMC Capital
Ambuja Cements: BUY| Target Rs 257| Stop Loss Rs 230| 1-2 months| Upside 6 percent
The stock closed at Rs 242.45 on 7th April 2017. It made a 52-week low at Rs 191 on 22nd November 2016 and a 52-week high of Rs 281.70 on August 31, 2016. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs 230.36.
As we can see on the charts, it has formed bearish Head and Shoulder formation but negated the same due to its tendency to remain on a stronger note since its inception.
Moreover, it could not breach the neckline, which is considered to be the continuation of bearish formation. Therefore, one can buy in the range of Rs 237-239 levels for the upside target of Rs 252-257 levels with a stop loss below Rs 230.
Container Corporation: BUY| Target Rs 1170| Stop loss Rs 1060| 1-2 months| Upside 4 percent
The stock closed at Rs 1,121.25 on 07th April 2017. It made a 52-week low at Rs 844.44 on 21st December 2016 and a 52-week high of Rs 1,232 on 02nd August 2016. The 200 days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs 1,016.24.
It has formed a double bottom pattern, which is bullish in nature. Moreover, it is getting support from oscillators, which are in oversold condition. Therefore, one can buy in the range of Rs 1,090-1,100 levels for the upside target of Rs 1,155-1,170 levels with a stop loss below Rs 1,060.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.