What to buy in March series? Top 4 stocks which could give up to 14% return

The market is expected to remain in the range of 10,200 on the lower side and 10600 on the higher side with mixed bias, Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities, said in an exclusive interview with Moneycontrol’s Kshitij Anand.

Q) It was a volatile week for Indian markets. There was one thing which was clearly visible that we are in sell on rallies kind of market. How is the coming week expected to pan out for investors?

A) We expect this weakness to continue with consolidation action over the next coming weeks. The Nifty50 is struggling to cross its 20-days and 50-days simple moving average (SMA) level which indicates that the near-term sentiments are likely to remain bearish.

We expect the 100-DMA to continue to hold as immediate support on the near-term chart. However, any break below 100-DMA (10420), we may witness more selling pressure in the market which could drag it towards 10300-10200 level in coming weeks.

Broadly, the market is expected to remain in the range of 10,200 on the lower side and 10,600 on the higher side with mixed bias. It looks like high volatility is here to stay in the coming weeks.

Q) How are FIIs positioned in the markets? They have already sold over Rs 10,000 crore in the Indian market in Feb as per provisional data

A) Indian markets are taking the cues from the global markets especially the US market. The expected rise in inflation in the US will lead to rising yields which is expected to have short-term pain for the global equity markets including India as they adjust themselves in the rising interest rate and economic growth scenario.

We expect the foreign institutional investors (FIIs) to remain on the selling side; major discomfort for them is a slightly high valuation of the Indian market and negative global cues.

However domestic institutional investors or DIIs are likely to continue to be on the buying side as they are getting huge money flows.

We feel that whatever is going to be sold by FIIs will be absorbed by the DIIs. We feel that if this domestic money flow continues from DIIs then it would not have a much negative impact on our market despite FII remaining net sellers.

Q) What should be the ideal strategy for mid & small caps post Budget which is attracting some bit of selling pressure?

A) We feel that midcap and smallcaps are likely to underperform as the market sentiment is weak and the midcap index is trading below its 100-days SMA which indicates bearishness in the short to medium term.

The midcap and small cap index is forming lower top lower bottom formation on the daily charts which supports bearish sentiment ahead.

Midcap and small cap chart structure suggest that if both the indices undergoes further 2-3 percent correction from current level then we may witness more unwinding action and it may correct further 6-7 percent towards important support level of 200-day SMA to test their previous swing low of February 2018.

Broadly, we may see negative bias in both the segment in coming weeks and on the higher side both the segment will face supply pressure in short term.

Q) What should be the strategy - buy on dips or sell on rallies in the coming week?

A) On the weekly chart, the index has formed a Bearish candle with a long upper shadow indicating selling pressure at higher levels. Since past four weeks, Nifty continues to consolidate within range of 10,640-10,300 thus indicating short-term sideways consolidation.

If Nifty breaks below 10,300-10,280 level then we may witness more selloff in the market and it may drift towards 10,100-10,000 levels in the short term.

The Nifty is facing stiff hurdle at 10,600-10,630 level and as long as it does not manage to cross this level on the weekly closing basis, it would witness supply pressure for any kind of pullback action.

Traders may use pullback towards 10,600-10,630 as shorting opportunity in the market with a stop loss above 10,700. We feel that the market will find comfort on the buying side above 10,700 and it may scale up further towards 10,850-10,900 levels.

Q) Top stocks which are looking attractive at current levels based on technical?

A) Here is a list of top four stocks which could give up to 14% return in the short term:

IDBI Bank Ltd: BUY | CMP: Rs 80.50| Target: Rs 92 | Stop loss: Rs 72| Return 14%

IDBI is in an uptrend on the short-term charts and has been forming a higher top and higher bottom formation. Since October 2017, the stock was seen in a major consolidation mode within Rs 55-70 band on the daily chart.

It gave a breakout at Rs 70 levels and is now sustaining well above the same. On the weekly chart, the stock has given a breakout of previous swing high placed around Rs 73 on the weekly closing basis with high volume action indicates bullishness ahead.

Both weekly and daily strength indicator along with the momentum indicator are in bullish territory and sustaining well above their reference lines which signal that the strength and upward momentum is there in the price.

Chart pattern suggests that stock may exhibit bullishness and it may scale up towards Rs 88-94 level in the coming few weeks.

Voltas Limited: BUY | CMP: Rs 617.05 | Target: Rs 660| Stop loss: Rs 580 | Return 7%

The most prominent observation on the price chart of Voltas is that the entire consolidation was underway since December 2017 and till date, it has formed a down-sloping trend line.

The breakout of this trend line is witnessed at Rs 590 levels on the weekly chart. The stock is sustaining above its 20, 50, 100 day EMA which supports the bullish sentiments ahead.

On the volumes front, the stock has witnessed a significant rise around the breakout level indicating increased participation on the rally.

Both weekly and monthly strength indicator such as RSI along with the momentum indicator stochastic are in the bullish territory and are now sustaining above their reference lines which signals strength and upward momentum in the price.

Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 650-660 while a stop loss can be kept below Rs 580 levels.

NIIT Technologies Ltd: BUY | CMP: Rs 868.05 | Target: Rs 940| Stop Loss Rs 815| Return 8%

NIIT Technologies is in an uptrend across all the time frames forming a higher top and higher bottom formation. Since February 2017, the stock was in a major consolidation mode within Rs 850-750 band on the daily chart.

It gave a breakout at Rs 850 levels and is sustaining above the same. On the weekly chart, the stock has given a breakout from the down-sloping trendline placed at Rs 830 levels.

The stock is also sustaining above its 20, 50 and 100 and SMA which supports bullish sentiments ahead. Both weekly & monthly strength indicator RSI along with the momentum indicator Stochastic are in bullish territory and sustaining above their reference lines which signals strength and upward momentum in price.

Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 920-940, and a stop loss can be placed below Rs 815 for all long trades.

Aurobindo Pharma Ltd: BUY | CMP: Rs 622.50 | Target: Rs 665| Stop loss Rs 585 | Return 7%

The most prominent observation on the price chart of Aurobindo Pharma is that the entire consolidation under way since December 2017 till date has formed a down-sloping trend line.

The breakout of this trend line is witnessed at Rs 608 levels on the weekly chart. The stock is sustaining above its 20, 50, 100 day EMA which supports bullish sentiments ahead.

On the volumes front, the stock has witnessed significant rise around the breakout level indicating increased participation on the rally.

Both weekly & monthly strength indicator RSI along with the momentum indicator Stochastic are in bullish territory and sustaining above their reference lines which signals strength and upward momentum in price.

Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 650-665, and a stop loss can be kept below Rs 585 for all long trades.