Podcast | Stock Picks of the Day: Top 3 trading ideas that could return 4-10%

Dinesh Rohira

In the week gone by, the equity market witnessed volatile trade on the back of rising crude oil prices, rupee devaluation and weak global triggers.

The Nifty ended the June series on a weak note as it fell sharply below 10,600 levels. It touched an intraday low of 10,571 and made a lower-band on a weekly basis.

On Friday, the Nifty witnessed buying throughout the day and managed to close above 10,700 levels led by FMCG and metal companies. The index recouped about 125 points on an intraday basis to close above its 10-day exponential moving average of 10,714.30, but down about a percent on a weekly basis.

With a halt in a weekly-trend, the index formed an insignificant bearish kind of candlestick pattern on the weekly charts despite a bullish pattern on the daily price chart.

The weekly price chart indicated weak sentiment among market participants. To vindicate the intraday rally of last Friday, the index has to continue with this upward trend for the next few sessions. A close above 10,750-10,780 is required for the momentum to continue.

The weekly relative strength index (RSI) level indicates no major divergence in the price as it stood at 57 levels, while weekly moving average convergence divergence (MACD) slightly shifted into bearish mode. It is currently above the signal line.

As the rollover activity remain sluggish for the July series, coupled with a substantial swing in the rupee-dollar, which touched the 69 mark last week, and lack of major triggers from the domestic market, the index is likely to continue to trade rangebound.

Investors can use rallies to exit current positions. We advise investors to remain cautious. If the Nifty continues to trade below the hurdle of 10,920-10,850 levels, then brace for a weekly rangebound target of 10,570 levels on the downside and 10,820 on the upside.

Here is a list of top 3 stocks that could offer 4-10% in the short term:

Kolte-Patil Developers Ltd: Buy| Target: Rs 302 | Stop-loss: Rs 261 | Return: 10%

Kolte-Patil Developer made a decent pullback in the recent trade after it went through a sharp correction from highs of Rs 383 levels on a year-to-date (YTD) basis, and took a strong support at Rs 229 levels.

It also managed to break out from the long-term moving average level of 100-50-days at Rs 259-248 levels and registered a gain of about 19 percent on an intraday basis.

Indicating a bullish trajectory, the scrip also witnessed robust volume growth which was substantially higher than average volume level.

On the weekly price chart, the scrip registered a strong bullish candlestick pattern indicating that the rally is likely to sustain a rally after decisively closing above crucial levels.

Further, the weekly RSI at 52 levels which is above the previous level signaled favorable divergence coupled with the positive signal on MACD trading above Signal-Line.

The scrip is currently holding resistance level at Rs 311 and a support level placed at Rs 246. We have a buy recommendation for Kolte-Patil Developers which is currently trading at Rs 274.65

Edelweiss Financial Services Ltd: Buy | Target: Rs 313 | Stop-loss: Rs 280 | Return 6%

Edelweiss Financial witnessed a positive breakout from the lower channel on the weekly basis after making a rangebound correction from a price-band of Rs 333-274 levels on the monthly price chart.

Despite slipping below a long-term crucial level of Rs 281, the scrip managed to breakout above 200 & 150-days EMA levels on closing basis indicating reversal of the trend.

Further, it also witnessed a strong volume growth which was above its average level on the weekly basis. The positive breakout on price-chart aided the scrip to form a strong bullish candlestick pattern which indicates a reversal trend from a downward regime.

The weekly RSI trend registered an upward level at 54 suggesting a positive divergence along with positive cues on MACD indicate fresh bullish crossover.

The scrip has a support at Rs 263 levels and resistance level placed at Rs 331. We have a buy recommendation for Edelweiss Financial which is currently trading at Rs. 294.50

Shriram Transport Finance Co. Ltd: Sell | Target: Rs. 1,248 | Stop-loss: Rs 1,320 | Return: 4%

Shriram Transport continued to consolidate on its weekly price chart from a higher band of Rs 1,627 towards a low of Rs 1,282 levels. It failed to reclaim momentum despite several attempts.

The scrip further slipped from crucial levels Rs 1,339-1,304 which marked a strong support zone, and indicates a negative trend for the scrip. The volume trajectory also remains subdued on the weekly-average basis.

The scrip formed a solid bearish candlestick pattern on its weekly price chart after breaching below crucial moving average level indicating a sustained pressure.

Further, the secondary momentum trend continued to indicate negative signal with RSI slipping below at 41 coupled with the bearish outlook from MACD trend.

The scrip is facing a resistance at Rs 1,339 levels and crucial support at Rs 1,222 levels. We have a sell recommendation for Shriram Transport which is currently trading at Rs 1,299.45.