All eyes on 9700 level on Nifty; 3 stocks which can give up to 30% return

ICICI Direct.com Research

The Nifty has corrected for seven consecutive sessions, its longest losing streak since June 2015 and in the process the short term stochastic has plunged to an oversold reading of 11.

Historically, the stochastic plunging below the 10 reading has led to technical bounce on the index front. In the present scenario, the index is poised near crucial support placed around 9700 regions amid highly oversold conditions.

In the coming session being the eight days of corrective phase (Fibonacci number) and the September series derivatives expiry, key thing to watch out will be whether the index is able to hold the 9,700 support on a closing basis as that would indicate a round of consolidation in the near term.

The confluence of key technical parameters converging around 9700 level make this a crucial support level to watch out in the present scenario as it is the confluence of the following:

Price wise equality with the last falling segment is near 9730 August 2017 low is placed at 9685. Previous resistance zone and breakout area of June 2017 consolidation is also at 9700

We believe, holding above the 9700 support on a closing basis will be crucial for the index to extend the ongoing consolidation between the broad range of 9700 and 10100 levels going forward.

The broader markets which have consistently outperformed the benchmark since August lows have also come under pressure and indicate extension of the corrective consolidation in the short term

Here is a list of three stocks which can give up to 11% return in next 6 months:

Titan Company: BUY| Target Rs654| Stop Loss Rs560| Upside – 11%| Time Frame 6 month

The stock entered into sideways consolidation mode after hitting a 52 week high of Rs638 in early August 2017 and, thereafter, has been oscillated in a narrow price band of Rs640 to 585 levels.

Time-wise, the stock has been in sideways consolidation mode for over six weeks against the preceding three-week session up move from 525 to 638, which has been retracted by just 50% so far.

Limited price wise correction and extended timewise consolidation highlights the robust price structure and augurs well for the continuance of the uptrend.

The stock is currently poised near the lower boundary of the short-term rising channel encompassing the up move since June 2017 till date and offers good risk/reward from a positional perspective.

We expect the stock to resume its upward trajectory going forward and head towards Rs725 levels in the medium term as it is the upper band of the rising channel which also coincides with the price wise equality with the June-August up move measured from the lower band of recent consolidation.

Asian Granito: BUY| Target Rs615| Stop Loss Rs405| Upside 30%| Time Frame Six months

The share price of Asian Granito India has remained in a secular uptrend since May 2014 as it continues to form a higher peak and higher trough in all time frames.

Within this structural uptrend, the stock has undergone periodic phases of consolidation providing fresh entry opportunities for investors to ride the uptrend.

We believe the sideways consolidation over the last two months has approached maturity and the stock provides a good entry opportunity with a favorable reward/risk set up for medium-term investors to ride the next up move within the larger uptrend

The stock witnessed a strong rally in June-July 2017 rallying from a low of Rs333 to its all-time high of Rs500 in just 7 weeks. Thereafter, the sideways consolidation over last two months has taken the pictorial shape of a bullish rounding formation as highlighted in the adjoining weekly chart.

The stock is currently at the cusp of the rounding pattern breakout thus offers fresh entry opportunity to ride the next up move in the stock

The key observation of price action reveals that the rallies since March 2017 has become bigger in magnitude than the preceding up move as the up move during June 2017 from Rs 333 to Rs500 (500-333=167 points) was bigger in magnitude than the preceding rally of March 2017 (277-392=115 points).

The price rallies getting bigger and swifter is a hallmark of the bull phase and corroborates the bullish view on the stock

Considering the robust price structure and above-mentioned technical observations, we expect the stock to continue with its current uptrend and head towards Rs 620 in the medium term as it is the measuring implication of the rounding formation being the width of the pattern ( 500-380=120 points) added to the neckline of the rounding formation thus projects upside towards Rs620

Sundaram Finance: BUY| Target Rs1850| Stop Loss Rs1570| Return 12%| Time Frame 6 months

Structurally, the share price of Sundaram Finance has remained in a broader trading range since its peak of 2015 (Rs1640). Within this larger trading range, the stock has maintained a higher high higher low sequence over the last six months highlighting the underlying positive price structure.

The entire up move since March 2017 has occurred in a well-defined rising channel highlighting persistent demand at elevated levels.

The stock is currently poised near its key support area of Rs1600 region being the confluence of the following technical parameters.

The lower band of up trending channel is placed near Rs1600. The rising 21 weeks EMA that has acted as a strong support over the last six months is currently placed at 1625 region.

The previous major breakout area and yearly highs of 2015 and 2016 are also placed around Rs1600 levels. We believe the stock is positively poised above the key value area and offers good entry opportunity with favourable risk/reward from a positional perspective to ride the next up move over the medium term.

We believe the stock is set to embark upon its next major up move and head towards Rs1990 over the medium term as it is the 161.8 percent external retracement of the entire corrective consolidation since the year 2015 from Rs1640 to Rs1102 placed at Rs1990 levels