The Nifty50 came under selling pressure in the opening trade but the index was still trading above its crucial support level of 10,000.
The Nifty formed a Bearish Belt Hold like candlestick pattern comprising of similar open and high (10137) as the index failed to sustain the initial gains and corrected throughout the session to end near the low point of the day.
Formation of Bearish Belt Hold suggests that there is some bit of hesitation near the upper boundary of the narrow rising channel which encompasses the up move since February 2017 till date.
The overbought nature of momentum oscillators RSI and Stochastic on the weekly scale with readings of 80 and 91 respectively, warrants a round of consolidation before the continuation of the larger degree uptrend.
“Over the last five sessions while the Nifty is seen hovering in a tight range above the 10000 mark, the market breadth has turned negative indicative of profit booking emerging across the broader markets represented by the midcap and small cap indices,” Dharmesh Shah, Head Technical, AVP at ICICI Direct.com at ICICI Direct.com Research told Moneycontrol.
“Going forward, we expect the index to undergo a healthy consolidation between the broad range of 9800 to 10100 levels in the near term while stock specific action will remain in focus amid the ongoing quarterly earnings season,” he said.
Shah further added that a round of consolidation from here on will make the market healthier and create fresh buying opportunities.
The immediate support base for the index has shifted upwards to 9,800 regions as it is the confluence of 50% retracement of which also coincides with the base of mid-July consolidation.
Here is a list of top 8 stocks to buy on dips which could give up to 21 percent return in the next 6 months:
Analyst: Dharmesh Shah, Head Technical, AVP at ICICI Direct.com at ICICI Direct.com Research
Hero MotoCorp: BUY| CMP – 3798| Target Rs4,180| Stop Loss Rs3570| Upside 10%| Time Frame 6 month
The share price of Hero MotoCorp has registered a resolute breakout from the Flag pattern thus providing fresh entry opportunity for medium term investors to ride the next up move
The entire consolidation over the last two months occurred above the rounding bottom breakout area of Rs3600 highlighting the change of polarity principle as per which a significant resistance once taken out reverses its role and acts as a support for future price movement.
We believe the eight weeks consolidation above the previous breakout area has laid the platform for the next up move.
We expect the stock to continue with its current uptrend and head towards Rs4220 over the coming month being the measuring implication of the Flag pattern, i.e. price parity with the previous up move from Rs3265 to 3880 (3880-3265=615) as projected from the recent trough of Rs3605
United Spirits: BUY| Target Rs3150| Stop Loss Rs2298| Upside 21% Time Frame 6 month
The share price hit a major trough during November 2016 in the vicinity of Rs1,800 and then went on to form the basing pattern over next two-quarters while discounting host of negative news flows.
After retesting the support near Rs1,800 again during April 2017, the share price made a sharp u-turn over the past couple of months thereby retracing its last declining leg faster.
In the process, it also broke past the February 2017 intermediate swing high of Rs2427 thereby completing the Double Bottom bullish reversal pattern
Breakout from a six-month long bottom formation after eight quarters of lower high-low sequence signals end of the prolonged corrective phase and thereby offer fresh entry opportunity to ride fresh uptrend, going forward
We expect share price to rally towards Rs3190 over next couple of quarters. The 61.8% retracement of the entire decline during 2015-2017 (Rs4030-1830) is placed at Rs3190. It also coincides with 2015 breakdown area at Rs3200 levels
Hindustan Zinc: BUY| CMP – 283| Target Rs327| Stop Loss Rs262| Upside 15%| Time Frame 1 month
The share price of Hindustan Zinc has registered a falling channel breakout on the weekly chart signalling a reversal of the corrective trend and offers a fresh entry opportunity to ride the next up move in the stock.
The stock has witnessed a strong rebound from the June 2017 low of Rs230 being the confluence of rising trend line joining major August’15 and January 2016 lows placed around Rs230, 50% retracement of the 2015-2017 up move (Rs117 to Rs333) placed at Rs225 and previous breakout area is also around 220-230 zone.
We expect the stock to continue with its current uptrend and head towards Rs330 over the coming months being the price parity with the previous up move from Rs230 to Rs285 (285-230=55 points) added to the recent trough of Rs275 (275+55=330) project upside towards Rs330 levels.
Manpasand Beverages: BUY| CMP-785| Target Rs885| Stop Loss Rs717| Upside – 13% Time Frame – 3 months
The share price of Manpasand Beverages registered a resolute breakout past the eight-month consolidation towards mid-May 2017 to signal resumption of the primary uptrend.
The entire corrective price action since September 2016 till May 2017 occurred in a well defined Triangle pattern.
A triangular consolidation pattern after a significant up move occurs as a bullish continuation pattern marking the secondary corrective phase before resumption of the primary uptrend
After the strong breakout rally, the stock is seen consolidating above the breakout area of Rs750 over the last 10 weeks. It highlights the change of polarity principle and signals a higher base building process that will act as launch pad for the next up move
We expect the stock to embark on a sustained up move from here on and head to challenge its previous life high placed around Rs888 levels over the coming months.
Analyst: Rohit Singre, Bonanza Portfolio Ltd.
Hero MotoCorp: BUY | Target Rs 4100 | Stop Loss Rs 3600| Upside 8%
The stock broke its 52-weeks high in early June and after that, it has made a fresh high of Rs3880 and from there we have seen some correction.
It seems that the recent correction is over because the stock again bounces from the same breakout level with decent volume suggesting it is all set to move further.
On the weekly chart, the stock is forming a bullish flag pattern which will get active soon and on the daily chart, it has given a needed breakout above its falling channel pattern with good volumes.
On the flip side, the stock has immediate resistance placed at Rs3,880 levels breaking above the same, we may head towards Rs4,100 in the counter. Traders can initiate a buy on stock for the target of Rs4100 and a stop out levels below Rs3600 on a closing basis.
Ramco System: BUY | Target Rs 480 | Stop Loss Rs 400 | Upside 10%
The stock cached the momentum as we have seen a quick up move in stock from Rs350 to Rs440 levels.
Technically, the stock has given a double bottom breakout on the short to long term charts with decent volume. On the daily chart, the stock has already surpassed above all the strong DMA’s like 200-100 etc., suggesting current momentum in stock will take stock further towards 480 levels on an immediate basis.
On the weekly chart, we have witnessed a very good volume activity suggesting a bottom is formed and the stock is all set to fly high.
Bonanza recommends a buy on stock at current levels to any dip near 420 for the targets of T1-480 with keeping a stop loss below 400 on a closing basis.
BPCL: BUY | Target Rs 538| Stop Loss Rs 458| Upside 10%
After making low at 400 stock changed the mood and started moving northwards. We have seen a consistent buying in the stock from lower levels of Rs400 to the current level at Rs486 and we expect the stock to continue its short rally towards Rs510 levels.
On the daily chart, the stock has broken its bullish flag formation with decent volume suggesting the stock is in a strong uptrend and may touch 510 levels in near term.
On the weekly chart, BPCL took support at its 50-EMA and rose steadily. On an immediate basis, the stock has a resistance near 500 & 510 levels. If the stock is able to hold above 510 then we may see stock to move into new territory.
Overall, the stock has potential to touch Rs538 in the near to short run and one needs to maintain a stop loss below Rs458 on the closing basis.
CEAT: BUY | Target Rs 2100| Stop Loss Rs 1800| Upside 9%
If we study chart historically, the stock moved after every small consolidation and on Wednesday session stock broke its strong resistance & small consolidation area with strong volume hinting stock ready to move towards fresh zone.
The stock has given a closing for the first time above Rs1925 levels with strong volumes hinting that the near term target could be around Rs2,100.
The stock was consolidating for nearly three months in the range of Rs1700-1900 and on Wednesday’s session, it has given a decisive breakout. We may expect 200 points move from current levels.
Momentum indicator RSI currently reading near 64 which is considered being bullish zone and consistent growth in volume also hinting more upside in near term.
Bonanza recommends a buy on stock for the target of 2100 with keeping stop out level below 1800 on a closing basis.
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