Nifty likely to see resistance around 10,225; 5 stocks which could give up to 16% return

Ashish Chaturmohta

The markets got off to a negative start for the week as weak global cues, FOMC meet, political developments and widened current account deficit weighed down on the market sentiment.

The Nifty lost 1 percent for the day to close at 10,075 levels on Monday. The index closed below the long-term 200-day moving average (DMA). Also, Nifty has broken below long-term rising support trend line originating from 9,342 levels connecting lows of 9,449 and 9,688.

In the Nifty options, Call option writing was seen in the strike price 10100 and 10200 as the market declined. But, in the Put options, strike price 10000 witnessed significant addition which also has highest open interest in Puts; suggesting a physiological level of 10,000 is likely to act as support for the market.

Ashish Chaturmohta

Head of Technicals and Derivatives|Sanctum Wealth Management

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A break below 10,000 levels, next support for the index is seen at 9,740 odd levels. The index has been unable to sustain above the short-term 20-day moving average during this decline and comes around 10,350 levels and becomes the level to watch on the upside.

While 10,225 is the resistance in near term.

INDIA VIX has seen a rise in last two sessions from 14.3 to 15.8 along with a decline in Put/Call ratio suggesting market likely to remain under pressure.

Here is a list of top five stocks which could give up to 16% return in the short term:

Cyient Limited: BUY| CMP Rs642| Stop loss 615| Target 720| Return 12%

The stock gave a breakout from its two-year base formation to touch its all-time high of 686 in the month of January. Price then corrected down to 590 levels where it found support at 100-day moving average and holding above it since then.

For the last six weeks stock has been consolidating in range of 590 to 645 odd levels and formed a short-term base. In last session stock shown positive price momentum and high volumes action suggesting buying participation in the stock.

Thus, the stock is likely to see a breakout on the on the upside. MACD has given positive crossover with its average, above its neutral level of zero suggesting the start of fresh uptrend. Thus, the stock can be bought at current levels and on dips to 635 with a stop loss below 615 for a target of 720 levels.

Future Lifestyle Fashions Limited: BUY| CMP Rs411| Stop loss 385| Target 480| Return 16%

The stock had seen a strong rally from 120 to 380 levels in the first half of last year. Since then the stock has been trading sideways with positive bias largely between 300 and 400 odd levels for last nine months.

It has been consolidating its gains after the run-up and forming a base for next leg of the uptrend. The lows during consolidation have been progressively higher indicating buying coming at higher levels.

In last three sessions, the price has rallied on good volumes suggesting buying participation in the stock. MACD has given positive crossover with its average, above its neutral level of zero suggesting the start of a fresh uptrend. Thus, the stock can be bought at current levels and on dips to 400 with a stop loss below 385 for a target of 480 levels.

Maruti Suzuki India Limited: BUY| CMP 8773| Stop loss 8550| Target 9450| Return 7%

The stock is in a major long-term uptrend forming higher top higher bottom formation. It touched high of 9996 in the month December 2017 and then corrected down to 8852 levels.

The 61.8% key Fibonacci retracement level of the upswing from 7691 to 9996 comes at 8570 odd levels. The stock has been holding above this support level for last few weeks.

Relative strength index has given positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips to 8700 with a stop loss below 8550 for a target of 9450 levels.

Steel Authority of India Limited: SELL| CMP 69| Stop loss 74| Target 60| Return 13%

The stock has been in a downtrend since mid-January this year forming lower top lower bottom formation on daily chart. Price breached below the support of 75 in the first week of March.

The subsequent bounce back faced resistance at 75 levels which was the earlier support level and now acted as resistance for the stock. The Fibonacci retracement level of 61.8% of the major upswing from 53 to 101 which, comes at 71 odd levels has also been broken.

In the last session, stock witnessed good volumes and closed below recent swing indicating a continuation of decline. Stochastic has given negative with its average and MACD also below its neutral level of zero confirming resumption of the downtrend.

Thus, the stock can be sold at current levels and on rise to 71 with a stop loss of 74 for a target of 60 levels.

Apollo Hospitals Enterprises Limited: SELL| CMP 1060| Stop loss 1100| Target 980| Return 7%

The stock has been major downtrend for the last couple of year forming lower top bottom formation. The stock touched low of 957 in November 2017 and then rallied back to 1250 odd levels. The stock witnessed consolidation between 1240 and 1100 levels. Price formed double top formation and has now seen a breakdown of the same. Thus, the stock can be sold at current levels and on rise to 1075 with a stop loss of 1100 for a target of 980 levels.