Abhishek Mondal
The Nifty ended Tuesday’s trading session with a subtle gain of around half a percent at 10,699.90 due to global cues. The market remained rangebound throughout the day as traders remained cautious ahead of Q1 earnings beginning next week.
The index continues to oscillate back and forth in a broader range. The upper end of the range is placed around 10,850 levels while the lower end is positioned at 10,550.
If the Nifty manages to breach 10,850 levels on the upper side on a closing basis, then it can resume the uptrend, taking it to higher levels of 10,930 and 11,014. However, a trade below 10,550 can trigger a correction to 10,440 and 10,360 levels.
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The relative strength index is also oscillating between 37 and 62, which indicates that the sideways bias could remain in the short term. The volatility index ended down 2.77 percent at 13 and is trading at the lower end of the range, indicating indecisiveness.
On the options front, maximum call open interest (OI) of 36.58 lakh contracts is seen at 11,000 strike, followed by 10,800, which now holds 28.81 lakh contracts. Maximum put OI of 55.26 lakh contracts is seen at 10,600 strike, followed by 10,700, which now holds 34.88 lakh contracts.
As per options data, immediate support for the Nifty is seen around 10,600 and 10,500, whereas 10,800 and 11,000 will act as an immediate hurdle before June expiry.
Here is a list of top 3 buy ideas that could offer 7-13% in the next 1 month:
Strides Shasun Ltd: Buy| Close: Rs 397 | Target: Rs 450 | Stop loss: Rs 360 | Return: 13.35%
The stock has formed a bullish engulfing pattern around 61.8% Fibonacci Retracement level of prior up move (333-422) on last Thursday with higher volumes, signaling a bullish trend reversal.
The key technical indicators Relative strength index (RSI) showing positive momentum and MACD trading below zero line with a positive crossover which indicates limited downside in the stock.
We believe the stock will soon surpass the short-term hurdles and it will move up toward 450 (50DMA) levels. Based on the above observations Traders can buy the stock in the range of Rs 393-397 with a stop loss below Rs 360 (closing) for a target of Rs 450
Asian Paints Ltd: Buy| Close: 1291.85 | Target: Rs 1450 | Stop loss: Rs 1240 | Return: 12.24%
After making an all-time high of Rs 1,332 in May 2018, the stock has been seen in a profit booking mode. In daily scale, the stock took support on 50 DMA and then bounced back and formed a flag formation.
The stock has given a breakout from this pattern with strong momentum and high volumes on Monday. The daily Relative strength index (RSI) showing positive momentum and MACD trading above zero line with positive crossover whereas (+) DI continuously trading above (-) DI, suggesting consolidation phase is over in the stock.
Traders can buy the stock at around current levels and add on dips around Rs 1,275-1,280 with a stop loss below Rs 1,240 (closing) for the target of Rs 1,450.
Divi's Laboratories Ltd: Buy| Close: 1,085.80 | Target: Rs 1,160 | Stop loss: Rs 1.030 | Return: 6.83%
The stock has given a break-out above its downward trend line around Rs 1,074-1,076 levels on Tuesday with higher volumes on the daily chart which suggest bullishness in the stock.
A daily momentum indicator Relative Strength index (RSI) reading at 55.12 level, showing positive momentum and MACD trading below zero line with positive crossover whereas (+) DI just crossover the (-) DI.
Based on the above observations Traders can buy the stock in the range of Rs 1,080-1,090 with a stop loss below Rs 1,030 (closing) for a target of Rs 1,160
Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.