"Buying optimism intact in quality names at lower levels; however, buying in momentum is advised to be avoided as market is braced for a time correction post the corrective rally in prices so that valuations gets attractive," says Soumen Chatterjee, Head of Research at Guiness Securities.
By Soumen Chatterjee
The Nifty50 manages to close in green and above its 100-EMA (10404) while Sensex ended in red after a volatile trading session on Tuesday.
The markets witnessed a strong up move led by sharp short-covering on Monday but on Tuesday the key indices fell sharply from day’s highs indicating consolidation/range-bound phase with intraday volatility to continue in near term.
So, far the Nifty has respected its 200-DMA (around 10,145 levels), which will continue to act as a major support while Resistance is seen around 10,600-10,650 levels.
Positive macro cues like robust Factory Output, lower retail Inflation, and Good Direct Tax collection numbers will keep the buying optimism intact in quality names at lower levels; however, buying in momentum is advised to be avoided as market is braced for a time correction post the corrective rally in prices (Nifty down almost 9-10 percent from peak) so that valuations gets attractive.
On the options front, maximum Put open interest of 48.84 lakh contracts stood at strike price 10,000 followed by 10,400, which now holds 45.69 lakh contracts.
While Maximum Call open interest of 48.52 lakh contracts is seen at strike price 10,500, followed by 10,700, which now holds 40.66 lakh contracts.
As per the option data, the Nifty is likely to remain in a narrow range for the next few trading sessions with immediate support stands around 10,400 levels whereas 10,500 will act as a minor hurdle and above that 10700 will be a major resistance in the March expiry.
India VIX marginally fell 0.2 percent at 14.46; however, it is still trading above the crucial mark of 13.00 which indicates mild volatility to remain in this expiry.
Here is a list of top five trading ideas by experts which can give up nearly 15% return in the short term:
Indian Bank: Buy | Target: Rs 336| Stop loss: Rs 269| Return potential: 14.7%
The stock has bounced back from lows after prices filled the gap, which was made on October 25, 2017 and around Rs 270 levels.
Positive divergence is seen in Relative Strength Index (RSI) along with positive crossover in stochastic means that the stock has made a temporary bottom and is set for a decent bounce back.
Investors can accumulate the stock in the range of Rs 287-294 for the upside target of Rs 336 and a stop loss below Rs 269 on a closing basis.
Titan Company Ltd: Buy | Target: Rs 914 | Stop loss: Rs 815 | Return 7.3%
The stock has given a consolidation breakout above Rs 840 levels with higher volume on the daily scale. The Relative strength index (RSI) and MACD have given positive crossover and are in Buy mode. Traders can buy the stock at current level and add on dips around Rs 840-842 with a stop loss below Rs 815 for the target of Rs 914.
Hexaware Technologies Limited: Buy | Target: Rs 423 | Stop loss: Rs 360 | Return: 10.2%
On the daily scale, the stock has given a breakout on Monday from a symmetrical triangle pattern above Rs 366-367 levels.
The Daily MACD has continued to remain in buy mode and Relative strength index (RSI) is showing upward momentum. OBV—On Balance Volume is making a fresh high from the previous top and this indicates that price may move towards a new high in coming days.
Investors can accumulate the stock in a range of Rs 378-384 with a stop loss below Rs 360 (closing) for target of Rs 423.
NBCC (India) Limited: Buy | Target: Rs 223 | Stop loss: Rs 181 | Return: 13.8%
After correcting significantly from its recent peak, the stock has made a Hammer-like candle on Monday around support zones followed by a strong up move on Tuesday with higher volume.
The positive divergence is seen in Relative Strength Index (RSI) and MACD has given positive crossover. One can buy the stock at current level and also add on dips to Rs 190 levels with the stop loss below Rs 181 (close) for target of Rs 223.
Pidilite Industries Ltd: Buy | Target: Rs 956 | Stop loss: Rs 870 | Return: 6.22%
The stock has given a breakout from symmetrical triangle pattern above Rs 896 levels with the moderate volume on the daily scale. The Daily Relative strength index showing upward momentum and MACD is making attempt to cross its signal line.
OBV—On Balance Volume is making a fresh high from the previous top and this indicates that price may move towards a new high. Traders can buy the stock in the range of Rs 895-900 with a stop loss below Rs 870 (close) for target of Rs 956.Disclaimer: The author is Head of Research at Guiness Securities. The views and investment tips expressed by investment experts 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.