A decisive trade above 11,840 will confirm short term trend reversal and Nifty can extend its move towards 11,980-12,070
Nifty traded in a tight range of 11,840-11,640 entire last week, forming an opening bearish Marubozu candlestick pattern. Current weekly candlestick pattern formation suggests an upmove is possible only above the previous week's opening price zone placed around 11,840.
Nifty is trading in falling channel after making a top of 12,103 and its upper trend line is standing near 11,840; a decisive trade above 11,840 will confirm short term trend reversal and index can extend its move towards 11,980-12,070.
Nifty is trading near 50-DMA that is rising and placed around 11,685. RSI (monthly) indicator is trading around 64, which signifies positive momentum is intact unless it slides below 50. At the same time, RSI on weekly time frame took a reversal from 50 forming pullback buy pattern. It currently trades around 59 level.
Major trend line support on lower time frame and principle of polarity is near 11,575-11,600. As long as the index trades above 11,640, we maintain buy on dip strategy whereas a close below the strong demand level of 11,575 will push prices lower towards 11,500-11,450.
After opening lower, Bank Nifty took support from a strong support zone of previous swing low and 50 percent Fibonacci retracement placed around 30,100 forming a Doji type indecisive candlestick pattern. As long as low of the previous week, i.e., 30,220 is intact, it can bounce back and trade higher towards 31,000.
Here are five stocks that could return 7-19 percent:
Welspun Corp: Buy Around Rs 135 | Target: Rs 160 | Stop loss: Rs 122 | Upside: 19 percent
The scrip took a sharp rebound on the upside after hitting the low of Rs 89 and rose upwards. Rising trend line near 50, 100 and 200-DMAs create buying opportunity on the daily chart in coming sessions.
Currently, it has been sustaining above its 200-DMA while bouncing back on upside. Indicator and oscillators are also lending support to the price action. A trader can enter from the level of Rs 135 for a target of Rs 160 while keeping a stop loss of Rs 122.
Apollo Tyres: Buy Around Rs 195 | Target: Rs 220 | Stop loss: Rs 184 | Upside: 13 percent
After hitting a high of Rs 307, Apollo Tyres has given correction and touched Rs 174 where its key support is seen. RSI has started curling up after testing its oversold zone and daily MACD has given bullish crossover in negative territory, that reflects bullish bias in the stock.
There are also suggestions of an upside move in the counter in coming sessions. Positional traders can create fresh long position around Rs 195 with a stop loss below Rs 184 on closing basis for an initial target of Rs 220.
Hexaware Technologies: Buy Around Rs 375 | Target: Rs 410 | Stop Loss: Rs 359 | Upside: 9 percent
The scrip took a sharp rebound on the upside after hitting the low of Rs 346 and rose upwards. Rising trend line near 50-DMA creates buying opportunity on lower side in coming sessions. Formation of bullish belt hold on the weekly chart is showing strength.
Currently, it has formed a strong base due point of polarity that comes near Rs 346-350. Rising histogram of MACD on the daily chart in negative territory is showing firmness that indicates support at current levels. One can go long in Hexaware around Rs 375 for a target of Rs 410 with a stop loss of Rs 359.
United Spirits: Buy Around Rs 555 | Target: Rs 605 | Stop loss: Rs 524 | Upside: 9 percent
Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. As of now, the emergence of hammer on the weekly chart with decent volume is giving cues for accumulating the scrip.
Currently, it has been sustaining above its short term and midterm moving averages while bouncing back on upside. Indicator and oscillators are also lending support to the price action. A trader can take enter at Rs 555 for a target of Rs 605 while keeping a stop loss of Rs 524.
Petronet LNG: Buy Around Rs 238 | Target: Rs 255 | Stop loss: Rs 225 | Upside: 7 percent
The counter appears to have formed a short term bottom near the lower base of a rising channel line from where it attracts buying interest around Rs 238. Buying momentum will accelerate above Rs 243 where pattern breakout is expected and can attempt to retest its previous top in coming sessions.
Declining histogram and bullish crossover in MACD is also suggesting upside momentum. Positional traders can create fresh long position around Rs 238 with a stop below Rs 225 on closing basis for an initial target of Rs 255.
The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.
Disclosure: The analyst does not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks.Disclaimer: 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.