Immediate resistance for Nifty at 10,440; top 5 stocks to buy which can return up to 15%

"Nifty has immediate resistance zone at 10,420-10,440 levels. Crossing this zone on sustainable basis, next zone for index is seen at 10,560-10,630 where 50 percent of rise and February congestion highs are seen," Ashish Chaturmohta, Head Technical and Derivatives at  Sanctum Wealth Management said in an exclusive interview with Moneycontrol's Kshitij Anand.

Domestic equity markets extended gains for the third consecutive day as trade war concerns between US and China dissipated slightly. The Nifty closed the day yesterday at 10,379 levels up by 0.5 percent. Market breadth was positive with almost two advancing against a decline on NSE. But BSE midcap and small cap indices underperformed the benchmark as managed gains 0.2 percent and 0.4 percent respectively.

The bounce back in Nifty has almost reached 38.2 percent Fibonacci retracement of the fall from 11,172 to low of 9,952 which comes around at 10,420 levels. Also, the 50 and 100 day moving average are in the region 10,440 levels. Thus, index has immediate resistance zone at 10,420-10,440 levels. Crossing this zone on sustainable basis, next zone for index is seen at 10,560-10,630 where 50 percent of rise and February congestion highs are seen.

On the downside immediate support is seen at 10,290-10275 levels and 10,200 levels. Breaking below 10,200 level Nifty may see retest of recent low of 9,950 levels.

Here are the top 5 stocks to buy which can give up to 15% return in the near term:

Biocon | Rating: Buy | CMP: Rs 620 | Target: Rs 700, stop loss: Rs 595 | Return: 13%

The stock witnessed breakout after nine months of consolidation from Rs 400 odd levels at the end last year and then quickly rallied to touch all time high of Rs 658 in the month of January this year. Since then stock has been trading sideways between Rs 658 to Rs 560 odd levels consolidating its gains over last couple of months.

Biocon has witnessed high volume on days of up move suggesting buying participation during this range bound period. In the short-term, the price has formed pennant pattern on daily chart and seen breakout from the same. Yesterday price witnessed price momentum and good volume action suggesting breakout is likely to sustain.

MACD has moved above neutral level of zero suggesting change of trend from sideways to up. Thus, Biocon can be bought at current level and on dips to Rs 610 with stop loss below Rs 595 for target of Rs 700 levels.

Indraprastha Gas Limited | Rating: Buy | CMP: Rs 303 | Target: Rs 350, stop loss: Rs 288 | Return: 15%

The stock is in long term uptrend forming higher tops higher bottoms on its daily and weekly chart. Recently, the stock hit all-time high of Rs 345 in the month of January and then corrected down to Rs 271 levels. From here, it rallied to Rs 317 levels where it faced resistance at 50-day moving average and then tested the low of Rs 271.

The bounce back in last three trading sessions is leading to formation of bullish double bottom pattern on daily chart. Relative strength index on weekly chart has given positive crossover with its average after five months suggesting downtrend might be over and the stock is likely to move higher. Thus, IGL can be bought at current level and on dips to Rs 298 with stop loss below Rs 288 for target of Rs 350 levels.

Bombay Dyeing | Rating: Buy | CMP: Rs 262 | Target: Rs 300, stop loss: Rs 248 | Return: 14%

The stock touched all time high Rs 305 in the month of January last year and then corrected down to Rs 177 odd levels. From there, it quickly rallied on back of buying participation as seen from high volumes at lower levels to touch high of Rs 295. Since then price has corrected 50 percent of the rise from Rs 177 to Rs 295 which comes around Rs 235 and held above it.

The price has crossed falling resistance trend line originating from February high of Rs 295 connecting high of Rs 272 and closed above the line. Yesterday the price witnessed price momentum and good volume action suggesting breakout is likely to sustain. Thus, Bombay Dyeing can be bought at current level and on dips to Rs 257 with stop loss below Rs 248 for target of Rs 300.

Tata Elxsi Limited | Rating: Buy | CMP: Rs 1042 | Target: Rs 1150, stop loss: Rs 1005 | Return: 10%

The stock is in long term uptrend forming higher tops higher bottoms on its weekly chart. The price touched high of Rs 1123 and then corrected down to Rs 923 levels where found support at 100-day moving average and the witnessed bounce back to Rs 1068 levels. It again tested the 100-DMA and on line daily line chart price has formed bullish double bottom pattern.

The price has given breakout from Bollinger bands with expansion of bands suggesting trend likely to continue in direction of breakout. MACD has moved above neutral level of zero suggesting change of trend from sideways to up. Thus, the stock can be bought at current level and on dips to Rs 1130 with stop loss below Rs 1005 for target of Rs 1150.

HDFC Bank Limited | Rating: Buy | CMP: Rs 1939 | Target: Rs 2100, stop loss: Rs 1880 | Return: 8%

The stock is in long term uptrend forming higher top higher bottom formation. It recently touched high of Rs 2015 in the month February and then corrected down to Rs 1830 odd levels. Since then the price has been trading in sideways range for last couple of months and witnessed consolidation in a range of Rs 1920 and Rs 1830 odd levels.

Yesterday, the stock witnessed breakout from this trading range and also given breakout from Bollinger bands with expansion of bands suggesting that the trend is likely to continue in direction of breakout. Thus, HDFC Bank can be bought at current level and on dips to Rs 1910 with stop loss below Rs 1880 for target of Rs 2100.