See Nifty at 10,960 levels this week; 3 stocks that could return up to 12%

Dinesh Rohira

The Indian equity market inched higher on Friday on positive sentiment, closing above its crucial levels. Amid developing geopolitical tension in Middle East countries, the Nifty firmly breached the 10,780 hurdle on a closing basis, led by metal, energy and banking stocks.

The Nifty, which opened gap-up, hit a low of 10,724 post opening. However, buying towards the closing hour took the index to higher levels, breaching its past rangebound level. The index closed at 10,806 levels on Friday with a weekly gain of 1.77 percent.

It witnessed a positive breakout on the secondary channel and formed a relatively bullish candlestick pattern on its weekly price chart. It further signalled positive strength with its weekly relative strength index (RSI) placed at 62, surpassing its previous level.

The index also witnessed positive crossover on its moving average convergence divergence (MACD), indicating a bullish trend, with price trading above the signal line.

A positive outcome is expected for the Bharatiya Janata Party (BJP) in Saturday’s Karnataka assembly election. This, coupled with a decent set of earnings so far. As a result, overall market sentiment is modestly on a positive curve.

However, geopolitical concerns, coupled with an upsurge in commodity prices, is likely to infuse pressure on the domestic market. Traders are advised to remain selective on sectors and stocks with positive momentum.

We maintain an upward bias on a weekly basis at 10,960 levels on the upside with a stop-loss below 10,670 levels.

Here is a list of top three trading ideas that could deliver up to 12% return:

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 sustain 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