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Last Updated : Feb 27, 2018 11:27 AM IST | Source: Moneycontrol.com

What to buy in a rangebound market? 5 stocks which could give up to 15% return

The index has some stiff resistance at 10615, where 20 and 50-days moving averages are seen. Thus, the index may see some profit booking above 10600, after a bounce back.

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By Ashish Chaturmohta

The Nifty opened in the positive and continued to see gains through the day to close at 10,583 levels, up by 0.87 percent on Monday. Following a bullish

Dragonfly Doji candlestick pattern on the weekly chart, the index showed a follow-through action on Monday.

In the last couple of days, the broader markets too have participated in the rally. For the last three weeks, the price has largely been trading in a range of 10300 -10640 odd levels and is now approaching its upper end.

Close

The index has some stiff resistance at 10615, where 20 and 50-days moving averages are seen. Thus, the index may see some profit booking above 10600, after a bounce back.

For the rally to continue, the index needs to cross and sustain above 10640 odd levels on the tradable basis. We expect the index to move towards 10736

which will fill the falling gap.

On the downside, breaking 10500 levels, the market will remain in the congestion zone and head towards 10350 levels.

Here is a list of top 5 stocks which could give up to 15% return:

Voltas Limited: BUY| CMP Rs613| Stop loss Rs580| Target Rs700| Return 14%

The stock touched a high of 675 in December 2017 and then witnessed a decline to 555 levels. The fall corrected 61.8% Fibonacci retracement of the rally from 495 to 675 levels and witnessed a bounce back.

The price retested the low to form a double bottom pattern on daily chart. The rally in the last sessions has been on above average volumes, indicating buying participation, coming in at lower levels in the stock.

The price has crossed 20-days moving average which was acting as resistance during the decline phase - indicating a change in trend.

Currently, the price is trading at the neckline of double bottom formation and is likely to break out on the upside considering the price, recent movement, and overall structure. Thus, the stock can be bought at current levels and on dips to 600 with a stop loss below 580 for a target of 700 levels.

Persistent Systems Limited: BUY| CMP Rs868| Stop loss Rs825| Target Rs1000| Return 15%

The stock has been largely range bound between 800 and 550 levels for almost last three years. In the last couple of months, the price had been consolidating at the upper end of the range.

Now, the price has formed a long-term base and gave a breakout from this accumulation pattern. The good part is that it happened on strong price momentum and high volumes indicating strong buying interest in the stock.

The price has also given a breakout from the Bollinger bands with the expansion of bands suggesting that the price is likely to move in the direction of the breakout.

MACD has given positive crossover with its average moving above the neutral level of zero suggesting the tart of a fresh uptrend. Thus, the stock can be bought at current levels and on dips to 835 with a stop loss below 825 and a target of 1000 levels.

Kalpataru Power Transmission Limited: BUY| CMP Rs478| Stop loss Rs450| Target Rs550| Return 15%

The stock touched a high of 535 in the month of January and then corrected down to 401 levels. The fall corrected 61.8% Fibonacci retracement of the rally from 322 to 535 levels.

Also, the decline has tested its previous all-time highs and witnessed a bounce back. This pullback touched a high of 494 to again correct to 448, forming a higher low.

The price has moved above 50-days moving average (DMA) and closed above it. Daily Directional Indicators i.e. DI lines have given positive crossover with each other.

The relative strength index (RSI) has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips to 465 with a stop loss below 450 for the next target of 550 levels.

Ajanta Pharma Limited: BUY| CMP Rs1425| Stop loss Rs1350| Target Rs1600| Return 12%

The stock had seen a sharp correction from the highs of 1595 levels to a low of 1236. The bounce back faced 1440 levels and corrected down to 1311 levels

and again saw a bounce back.

On the daily line chart, the price has formed a bullish double bottom pattern with slightly higher low. The price has moved above its 20-days moving average and closed above it with a bullish candlestick accompanied by above average volumes which suggest buying participation in the stock.

Thus, the stock can be bought at current levels and on dips to 1400 with a stop loss below 1350 for a target of 1600 levels.

Navin Fluorine International Limited: BUY| CMP Rs805| Stop loss Rs760| Target Rs900| Return 12%

The stock has seen a long-term uptrend forming a higher top and higher bottom formation on the weekly chart. For the last couple of months, the stock has seen a correction from 880 to 730 odd levels.

The price has taken a support at its 100-days moving average which has acted as support on multiple occasion in the past. In the last couple of days, the stock has seen the high volume with positive price action suggesting buying participation.

The weekly directional indicators i.e. DI lines have given positive crossover with each other suggesting price correction is over. Thus, the stock can be bought at current levels and on dips to 795 with a stop loss below 760 and a target of 900 levels.

Disclaimer: The author is Head of Technicals and Derivatives, Sanctum Wealth Management. 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 27, 2018 11:27 am
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