Nifty has been trending higher and the base has shifted to 16,000 levels on a closing basis and till those levels are held, the short-term target comes to 16,450-16,590 levels. The Bank Nifty was stuck within a smaller range of 32,600-35,700 on a closing basis, however, it has now managed to close above 35,500 and that is quite positive going forward.
On the derivatives front, for this weekly expiry, the 16,000 strike has the highest open interest as far as Puts are concerned, hence that is important support whereas the 16300 strike has the highest open interest as far as Calls are concerned hence that is the short term resistance and above that 16400 and 16500 strikes have also seen second-highest Calls open interest so, at every 100 points from 16300 to 16500 there have been Calls written indicating that there will be profit booking at higher levels.
As far as Bank Nifty is concerned for this weekly expiry 36000 strike has highest open interest as far as Puts are concerned and thereafter 35800 and 35500 strikes. On the upside, 36500 has the highest open interest as far as Calls are concerned followed by 36200 strike where there are second-highest calls open interest, hence 36200 is crucial to be taken off on a closing basis as a close above that will take the Index till 36500 levels.
The Nifty IT and Nifty Private Sector Bank indices are likely to trade with a positive bias in this series whereas the other Indices are likely to see some profit booking.
Here are three stock picks for double digit returns:
PVR: Buy | CMP: Rs 1,422 | Target: Rs 1,531-1,596 | StopLoss: Rs 1,352
PVR seems to have completed a wave 4 consolidation on the weekly charts and it seems to be breaking out of the falling channel that has been formed in its wave 4 correction. Now, in its wave 5 the minimum target comes to Rs 1,531 which is 78.6 percent of its wave 1 whereas Rs 1,596 is the equality target of its wave 1. The momentum is absolutely in the favour of the bulls as the MACD on the daily, weekly and monthly charts is well into the buy mode.
Grasim Industries: Sell | CMP: Rs 1,484 | Target: Rs 1,357-1,271 | StopLoss: Rs 1,551
Grasim has provided a breakdown from the ending diagonal pattern that was formed in its wave 5 of wave 3 up. The stock is likely to test the levels from where it started this pattern hence the first target is Rs 1,357 and below that it is likely to test its 200DEMA i.e. Rs 1,271 levels as of today. The momentum indicator is in the favour of the bears in the short term as the weekly MACD is well into the sell mode and now the daily MACD has turned negative divergence thus increasing the probability of a downside.
Kotak Mahindra Bank: Buy | CMP: Rs 1,809 | Target: Rs 1,980-2,040 | StopLoss: Rs 1,730 (on a closing basis)
Kotak Mahindra Bank has provided a breakout from the triangular pattern that has been formed in its wave 4. The stock is now trading well above its 50 DEMA and 200 DEMA which is also quite positive for the stock in the short term medium term. The stock doesn't have any major resistance now until Rs 1,980 hence that is the first target and since it has resumed its wave 5 up so it is likely to test its previous lifetime highs hence Rs 2,040 is the second target. Now, the stock is unlikely to close below its 200DEMA so, Rs 1,730 is its stop loss on a closing basis. The momentum indicator MACD has turned positive and it's in favour of the bulls, it is in fact well above the zero reference line with a positive divergence. The weekly MACD is also reversing from quite an oversold territory indicating that the probability of an upside is higher from hereon.
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