We have collated a list of 12 stock strategies that investors could deploy ahead of the Karnataka election verdict on Tuesday.
After witnessing a rather smooth ride in the week gone by, investors should brace for some volatility around the Karnataka election verdict. The Nifty rose about 1.7 percent for the week-ended May 11 and managed to close above 10,800 levels. But the move was largely led by index heavyweights, despite the market breadth remaining negative.
It was a terrible week for so many counters, especially those from the midcap universe that have been hammered brutally during last week. The only positive from last week trade was the Nifty’s close above 10,800 levels, ahead of the Karnataka election verdict, which suggests a favourable election outcome for markets.
“It looks like some hope has been built by the traders’ fraternity on Bharatiya Janata Party (BJP) becoming victorious in this crucial battle. In the initial part of the forthcoming week, it is advisable to stay light and keep assessing how the market behaves for a day or two post the key political event,” Sameet Chavan, Chief Analyst Technicals and Derivatives at Angel Broking, said.
He added that traders need to be prepared for all kind of possibilities and should ideally position themselves accordingly. “Considering the stock specific destruction in the week gone, traders need to be very agile when it comes to a stock picking.”
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From a technical point of view, surpassing this stiff hurdle of 10,800 certainly bodes well for the bulls. “If we have to keep this event aside and make a judgment only on the basis of charts, we may see a continuation of the ongoing momentum towards 10,860-10,900 levels,” experts suggest.
Though Chavan did not want to hazard a guess on the political front, he sees some kind of profit-taking at higher levels post event in case of a favourable outcome for the BJP.
On the downside, experts see 10,690 followed by 10,600 as key supports. A sustainable move below these points would apply brakes on the ongoing optimism.
We have collated a list of 12 stock strategies that investors could deploy ahead of the Karnataka election verdict on Tuesday:
Analyst: Sameet Chavan, Chief Analyst, Technicals, and Derivatives at Angel Broking
SAREGAMA India: Buy| Target: Rs 920| Stop loss: Rs 730| Return 15%
After a long consolidation, the counter has managed to burst through its strong hurdle of 780 on a closing basis. The price activity is accompanied by more than its average daily volumes.
In addition, the weekly charts are now looking quite encouraging and are suggesting a decent upside in the near term. We recommend buying for a near-term target of Rs.920. Traders can keep their stop losses at Rs.730.
Monsanto: Buy| Target: Rs 2940| Stop loss: Rs 2,700| Return 6%
It is generally considered as a slow-moving stock and hence, it’s not a trader’s favorite counter. But having said that, the way it is shaped up now, we will not be surprised to see a strong move in the near term.
On Thursday, the stock prices broke out from the congestion zone and now looking at the weekly chart, we expect a takeoff quite soon. Hence, one can look to go long for a target of Rs. 2,940 by following a strict stop loss of Rs.2,700.
Canara Bank: Sell| Target: Rs 230| Stop loss: Rs 255| Return 6%
Of late, there has been a consolidation seen around its retracement level of 250. The stock prices vacillated around it for nearly three weeks and now, due to last weeks’ correction, we can witness a breakdown from this crucial near-term supports.
In technical terms, we can call it as a confirmation of the ‘Inverted Flag’ pattern and this structure now projects a target of 230 in next few days. One can look to go short for a target of Rs. 230 by following a strict stop loss of Rs.255.
Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
Biocon: Buy| Target: Rs 658| Stop loss: Rs 610| Return 4%
After the recent correction, this counter appears to be stabilising around its 50-days EMA and appears to have formed a bottom around Rs 615 levels. On a bounce from this base, it can initially head to test its gap zone between Rs 653 – 658 levels registered on 3rd of May.
Hence, traders should make use of this opportunity and go long for a target of Rs 658 and a stop below Rs 610 on closing basis.
Indiabulls Housing Finance: Buy| Target: Rs 1297| Stop loss: Rs 1195| Return 4%
After the recent fall from the highs of Rs 1,390, this counter appears to have stabilised around its 200-day moving average (DMA) and registered a Bullish Engulfing formation suggesting a bottom may be in place. Positional traders should go long with a stop below Rs 1,195 and a target of Rs 1,297.
Mahindra & Mahindra Ltd: Buy| Target: Rs 925| Stop loss: Rs 847| Return 6%
After hitting a lifetime high of Rs 887, this counter appears to be in consolidation mode for the last 8 trading sessions. It appears that the stock has formed a short-term bottom around Rs 850 levels.
Recent breakouts on the long-term charts thrown up attractive targets which positional traders should make use in this consolidation phase. Traders can go long for a target of Rs 925 and a stop below Rs 847 on a closing basis.
Analyst: Dinesh Rohira, Founder & CEO, 5nance.com
Welspun India Ltd: Buy | Target: Rs 74 | Stop loss: Rs 57 |Return 12%
Welspun India formed three lower-bottoms on its yearly price chart after making a 52-weeks high at Rs 93 levels. It made several attempts to break out from its higher top after consolidating at Rs 65 levels but continued to trade downward at 57-55 levels.
However, last week, it made a strong breakout from its 200-20-days EMA placed at 63 with decisive volume growth which indicates a positive trend.
On the daily price chart, after closing with about 8 percent intraday gain, the scrip made a solid bullish candlestick pattern.
The weekly RSI level at 51 marginally witnessed a positive divergence along with positive takeover on MACD nearing its Signal Line.
The scrip has a support at 51 levels and resistance level at 78. We have a BUY recommendation for Welspun India which is currently trading at Rs. 65.90
Rain Industries Ltd: Sell | Target Rs 256 | Stop loss: Rs 290 | Return 7%
Rain Industries consolidated on its monthly price chart despite attempting to move upward in last week’s trade, but selling pressure towards the weekend session dragged the scrip from crucial levels placed at Rs 339 levels.
The scrip slipped from its 20-50-days EMA levels coupled with significant negative volume growth, indicating a stiff resistance.
The scrip formed a solid bearish candlestick pattern on its daily price chart after breaching below its 20-50-days EMA level indicating a sustained pressure.
Further, the secondary momentum indicator continued to indicate negative signal with RSI placed at 39 levels breaching below the previous level, while MACD chart inched near bearish crossover.
The scrip is facing a resistance at Rs 318 levels and support is placed at Rs 245 levels. We have a sell recommendation for Rain Industries which is currently trading at Rs 274.20
Mahindra Lifespace Developers Ltd: Buy | Target: Rs 545 | Stop loss Rs 495 | Return 5%
Mahindra Lifespace went through a consolidation phase since January 2018 after making a higher top at Rs 538 levels and took a strong support at Rs 420-414 levels.
Despite remaining muted in the early session, the scrip made a positive breakout on its weekly price chart along with strong volume growth, indicating a trend reversal.
The scrip formed a bullish candlestick pattern on its daily price chart indicating a reversal pattern from past trend.
Further, a secondary momentum indicator witnessed a breakout with its weekly RSI shifting upward at 65 levels coupled with positive crossover on MACD at 5 from Signal-Line.
The support level for scrip is currently placed at Rs 477 and resistance level from the upper band is placed at Rs 560. We have a BUY recommendation for Mahindra Lifespace Developers which is currently trading at Rs 518.80
Analyst: Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities
PTC India Ltd: Buy| CMP: Rs 98| Target Rs 104| Stop Loss: Rs 93| Return 6%
PTC India has formed a solid Bullish candle on the weekly chart indicating positive bias ahead. Another prominent observation on the price chart of PTC India was that the entire consolidation under way since Jan 2018 till date has formed a down-sloping trend line.
The breakout of this trend line is witnessed at 92 level on the weekly chart. The stock is sustaining above its 20 and 50-days moving average which supports bullish sentiments ahead.
Both daily and weekly strength indicator RSI along with the momentum indicator Stochastic are in a bullish territory and are 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 102-104.
Exide Industries Ltd: Buy| CMP: Rs 261| Target: Rs 280| Stop loss: Rs 247| Return 7%
The most prominent observation on the price chart of Exide Industries is that the entire consolidation under way since February 2018 till date has formed up-sloping trend line.
The breakout of this trend line is witnessed at Rs 255 levels on the weekly chart. The stock is sustaining above its 20, 50, 100-days SMA which supports bullish sentiments ahead.
On the volumes front, the stock has witnessed significant rise around breakout level indicating increased participation on the rally.
Both weekly and 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 275-280.
eClerx Services: Buy| CMP: Rs 1,379| Target: Rs 1,525| Stop loss: Rs1,300| Return 10%
The most prominent observation on the price chart of eClerx Services is that the entire sideways consolidation under way since Feb 2018 till date has taken the shape of a bullish Head & Shoulder formation as highlighted in the adjoining daily price chart.
This pattern breakout was observed at Rs 1,361 levels (Neckline @ 1,361). The measuring implication of the price pattern i.e. the distance from the neckline to the base of the Head & Shoulder formation is (1,360-1,160=200 points) projected from the breakout level of Rs 1,360 provides upside target of Rs 1,560 approximately.
The stock is sustaining above its 20 and 50-days EMA which supports bullish sentiments ahead. On the volumes front, the stock has significantly risen around breakout level.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.