Ashish Chaturmohta
The market opened Monday positive following strong global cues, but the gains were short-lived and markets slipped into the red. The Nifty closed at 10,629, down 0.63 percent for the day.
Market breadth on the National Stock Exchange was dismal with one share advancing for every five declines. The BSE MidCap and SmallCap indices lost 0.8 percent and 2.1 percent, respectively.
The Nifty made another attempt to climb above 10,765 levels, but was unable to cross the same for the third straight session. On the daily chart, it has formed a long bearish belt hold candlestick pattern at the resistance level.
The relative strength index (RSI) has given a negative crossover on the daily chart suggesting a short term reversal on the downside. If the index closes below 10,620 levels, we expect it to retest 10,560 which is its immediate support. Below that, its next support is placed at 10,417 levels.
On the upside, the market needs to cross and sustain above 10,765 on a tradable basis for the uptrend to resume. In that case, it could rally towards 10,870 levels where the falling resistance trend line connecting highs of 11,172 and 10,929 is seen.
In Nifty options, significant call writing was seen in strike price 10,700 and 10,800 suggesting that the upside is likely to be capped.
Here is a list of top five stocks which could offer 9-11 percent return in the short term:
Infosys: Buy | CMP: Rs 1,239 | Stop loss: Rs 1,200 | Target: Rs 1,350 | Return 9%
On the long-term charts, the stock has made a bottoming out formation between Rs 1,280 and Rs 900 odd levels over the last two-year period.
For the last four months, the stock had been consolidating between Rs 1,200 and Rs1,100 odd levels and given a breakout from the range.
Post the breakout, the stock price has been trading in a narrow range above the breakout level. Price is trading above 21-day exponential moving average which has been acting as support for the stock on dips.
The weekly MACD has given a positive crossover with its average above neutral level of zero suggesting consolidation phase is over and the stock is likely to start an uptrend.
The stochastic oscillator 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 Rs 1,225 with a stop loss below Rs 1,200 for a target of Rs 1,350 levels.
Dabur India: Buy | CMP: Rs 385 | Stop loss: Rs 370 | Target Rs 430 | Return 11%
The stock is in a long-term uptrend forming higher tops and higher bottoms on the weekly charts. It witnessed a correction in late January to March this year from Rs 369 to Rs 312 levels.
The recovery from the low has been faster than the fall and hit a new high of Rs 383 last month. Above average volumes at the bottom and subsequent bounce back indicates accumulation in the stock at lower levels.
The stock had been trading in a range of Rs 383 and Rs 365 levels for the past three weeks, consolidating its gains. Currently, the stock has given a breakout from the short-term consolidation and is now trading at all-time highs.
Thus, the stock can be bought at current levels and on dips to Rs 380 with a stop loss below Rs 370 and a target of Rs 430 levels.
Page Industries: Buy | CMP: Rs 24,827 | Stop loss: Rs 24,000 | Target: Rs 27,500 | Return 10%
The stock has formed a bullish inverted complex head and shoulders pattern on the weekly chart with the double bottom formation as head of the pattern.
The up move from the low of the pattern has been on long body bullish candles which indicates strong price momentum while declines on smaller body candles.
The price is currently trading at breakout level and is poised for a breakout on the upside. The ADX line has moved above neutral level of 20 indicating strength in an uptrend on the daily chart.
Thus, the stock can be bought at current level and on dips to Rs 24,700 with a stop loss below Rs 24000 and a target of Rs 27,500 levels.
Mahindra & Mahindra: Buy | CMP Rs 915 | Stop loss: Rs 880 | Target: Rs 1,020 | Return 11%
Looking at the long-term monthly chart, the stock has seen a multiyear consolidation between Rs 750 and Rs 550 odd levels since 2014. For the last few months, the stock has been in an uptrend forming higher tops and higher bottoms on the daily chart.
It has given a breakout from the long-term base formation which is a bullish sign. After the breakout, the stock has hit an all-time high of Rs 934 last week on high volumes.
The momentum indicators are in bullish mode on the daily and weekly chart. Thus, the stock can be bought at current levels and on dips to Rs 905 with a stop loss below Rs 880 for a target of Rs 1,020 levels.
NBCC (India): Sell| CMP: Rs 86 | Stop loss: Rs 90 | Target: Rs 78 | Return 9%
The stock is in downtrend forming lower tops lower bottom formation on the daily chart. The price has broken below its support level of Rs 90 with above average volumes indicating a continuation of the downtrend.
Also, on the daily chart, the price has formed a bearish three black crows candlestick indicating further downside. The ADX line has moved above neutral level of 20 indicating strength in a downtrend on the daily chart.
MACD has given negative crossover with its average below neutral level of zero on the daily chart. Thus, the stock can be sold at current level and on rise to Rs 88 with a stop loss above Rs 89 for a target of Rs 78 levels.
Disclaimer: The author is Head Technical 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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