"The Nifty continues to trade below the long-term 200-day moving average and rising support trend line originating from May 2017 and low of 9342 levels connecting lows of 9449 and 9688 which comes around 10180 levels, says Ashish Chaturmohta, Head Technical and Derivatives, Sanctum Wealth Management.
By Ashish Chaturmohta
After last week’s pounding, benchmark indices got off to flying start in truncated expiry week. The Nifty50 gained 1.33 percent to close at 10131 levels with a long bullish candlestick.
Still, the broader markets underperformed benchmarks with BSE Midcap and Small Cap Indices gaining 1.2 percent and 0.7 percent respectively.
The Nifty has retraced 38.2 percent Fibonacci level of the rally from December 2016 low of 7,893 to January 2018 high of 11,172 which comes around 9,920 levels.
Last week index slipped to 9933 and then saw a bounce back after testing it again in the opening trade on Monday.
The index has filled the falling gap area of last Thursday and closed above it. Still, the index continues to trade below the long-term 200-day moving average and rising support trend line originating from May 2017 and low of 9342 levels connecting lows of 9449 and 9688 which comes around 10180 levels.
The decline from its all-time has failed to sustain above the shorter term 20-day moving average (DMA) and acted as resistance for the market which comes around 10285 levels.
Thus, bounce back can continue towards 10180 and then 10285 levels which need to be crossed for the rally to extend towards 10480-10530 levels.
In Nifty options, Calls witnessed unwinding while in Puts writing activity was seen in 9950 to 10100 strike price suggesting a bounce back may continue. On the downside, support is seen at 10010 and then at 9920 levels.
Here is a list of top five stocks which could give up to 12% return in the short term:
Ajanta Pharma Limited: BUY | CMP: Rs 1407 | Stop loss: Rs 1340 | Target: Rs 1580 | Return 12%
The stock witnessed strong rally from September 2017 low of Rs 1120 to high of Rs 1595 on January 2018. The rally was on good volumes indicating buying participation in the stock.
Since then price witnessed correction on below average to find support around 61.8 percent Fibonacci retracement level of the rise (Rs 1120-1595). The price has managed to hold above this support level of Rs 1300 levels and seen a bounce back on multiple occasion in last seven weeks.
Thus, the price has seen consolidation between Rs 1440 and Rs 1300 odd levels and formed a base. In the last couple of days, the stock has seen a strong bounce back from the lower end of the range.
The Relative strength index has given positive crossover with its average. Thus, the stock can be bought at current level and on dips to Rs 1390 with a stop loss below Rs 1340 for a target of Rs 1580 levels.
Zee Entertainment Enterprises Limited: BUY | CMP: Rs 586 | Stop loss: Rs 555| Target: Rs 660| Return: 12%
The stock has seen a correction from its 52 weeks of Rs 619 touched in January to Rs 547 levels. Price has retraced 50 percent of the rise from October low of Rs 477 to a high of Rs 619 which come at Rs 547 levels. The stock has seen series of lows formation in the region of Rs 558 to Rs 447 indicating buying coming in this zone.
The stock has seen a strong bounce back in the last couple of this support zone to close at the higher end of last seven weeks range.
Thus, the stock has seen consolidation between Rs 590 and Rs 447 odd levels and formed a base. Thus, the stock can be bought at current level and on dips to Rs 575 with a stop loss below Rs 555 for a target of Rs 660 levels.
Apollo Tyres Limited: BUY | CMP: Rs 268| Stop loss: Rs 250| Target: Rs 300 | Return 12%
The stock has been trading between Rs 290 and Rs 225 odd levels for last eight months. Price has witnessed sharp bounce from the lower end of the range at the beginning of February month to touch high of Rs 280 levels.
Since then the price has been forming lower lows and consistently finding support at Rs 250 odd levels. Thus, the stock has formed descending triangle formation on daily chart.
In the last couple of days, the stock has seen a strong bounce back from the support level of Rs 250 trading at breakout level with bullish candle formation on daily chart. Thus, the stock can be bought at current level and on dips to Rs 262 with a stop loss below Rs 250 for a target of Rs 300 levels.
Bajaj Finance Limited: BUY | CMP: Rs 1742| Stop loss: Rs 1655 | Target: Rs 1950 | Return: 12%
The stock has been in decline mode since it made double top around Rs 1980 in the month of September-October 2017 and touched low of Rs 1511 last month.
The stock has crossed falling resistance trend line originating from October high of Rs 1674 connecting Rs 1843 high. Last one week has seen above average volumes with positive movement indicating buying participation in the stock.
The price has given breakout from Bollinger bands with the expansion of bands suggesting trend likely to continue in direction of the breakout. Thus, the stock can be bought at current level and on dips to Rs 1720 with a stop loss below Rs 1655 for a target of Rs 1950 levels.
UPL Limited: BUY | CMP: Rs 724 | Stop loss: Rs 690 | Target: Rs 800 | Return: 11%
The stock has seen a decline from August 2017 high of Rs 903 to touch low of Rs 673 last month. The price has been consistently finding support in the zone of Rs 690-680 levels and holding above.
The stock has formed a base of Rs 730 levels and Rs 680 odd levels over the last couple of months. Relative strength index has given positive crossover with its average. Thus, the stock can be bought at current level and on dips to Rs 715 with a stop loss below Rs 690 for a target of Rs 800 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.