Podcast | Nifty likely to head towards 10,900; 3 stocks which can give up to 14% return

Rohit Srivastava

The weekly chart pattern for Nifty50 shows an interesting structure. The index, in March, tumbled for four consecutive weeks. It made a bottom at 9,951 and thereon it has witnessed a swift rally in April.

The index posted five consecutive positive weekly closes after four sequential negative weeks which shows V-shaped kind of recovery in the index. This has resulted in an ‘Impulse’ formation on the upside.

An Impulse is a typical characteristic of a strong move leading to a significant progression of the price. The hourly chart shows that the entire impulsive move unfolded in a channelized manner.

Over the last few sessions, the index was in a consolidation mode, which resulted in an ‘Expanding Triangle’ formation on the hourly chart.

In terms of Fibonacci retracements, the consolidation was taking place near 50 percent retracement of the Feb-March fall. The consolidation i.e. the expanding triangle found support near the lower end of the rising channel thus tossing the index towards the upper channel line in the last session.

With this move, the index has formed fifth leg of the impulse structure. Fibonacci retracement reveals that in the last session, the benchmark index has tapped at the Golden Ratio mark i.e. 61.8 percent retracement of the fall from 11,171 to 9,951.

The level is at 10,705, will act as a crucial hurdle for the index in this week. A failure to cross this level on closing basis can lead to a minor degree correction over the next few sessions.

Thus a minor degree dip towards 10,550-10,500 is plausible, which can be taken as a buying opportunity. Overall, Nifty is expected to head towards the 78.6 percent retracement mark i.e. 10,910.

On the other hand, if bulls manage to surpass the level of 10,705 on closing basis, then the index can stretch towards 10,910 without any hesitation

Here is a list of 3 trading ideas which could give up to 14% return in the short term:

PTC India: BUY| CMP: 89.70| Stop Loss Rs86.70| Target Rs102| Return 14%

The daily chart of PTC India shows a ‘Three Wave’ correction after a Five Wave rise. The correction retraced nearly 78.6 percent of the rise, which proved to be a crucial support. The daily lower Bollinger Band also offered support.

As per Elliott Wave Theory, PTC India is expected to form another set of a Five Wave rise from the current level. There is a high probability that the stocks will head higher from current levels and investors can initiate fresh positions on the long side.

Piramal Enterprises Ltd: BUY| CMP: Rs2635.80| Stop Loss Rs2550| Target Rs2900| Return 10%

Piramal Enterprise Ltd or PEL witnessed a multi-month correction from the highs of Rs3070 registered in June last year. The correction looks over in the last month at the low of 2275. Thereon the stock seems to have embarked on a fresh rally, which can last for several months.

Thus the stock looks positive from short-term as well as medium-term perspective. It is moving up along with a rising trendline which is a positive sign for the bulls.

The recent structure shows that the stock has consolidated above the trendline and has also broken out from the narrow range in which it was consolidating on the upside.

CEAT LTD: BUY| CMP: Rs1559.85| Stop Loss Rs1508| Target Rs1787

In terms of price patterns, CEAT is forming an ‘Inverted Head & Shoulders’ pattern, which is a bullish pattern. The pattern is spanning over several weeks so the implication of the pattern breakout is likely to be significant.

Currently, the stock is forming right shoulder of the pattern. Hereon, it is expected to head towards the neckline and can eventually breakout on the upside. The risk reward ratio at this level is very attractive to take a fresh long position.