The recent upmove in the Nifty has found initial resistance at the falling trend line on the daily chart. A clean takeout of the falling trend line, which is currently pegged at 10,772, is expected to set Nifty for a rally towards 10,830-10,900.
Achin Goel
The Nifty, which started higher, traded mostly with a positive bias before closing 70 points higher on Wednesday. During the session, it moved above the most recent inflection point on the daily chart, which suggests growing optimism.
It ended the session above its 21-day double exponential moving average for the first time in few days. The Nifty moved above the 61.8 percent retracement of the previous fall from 10,893 to 10,557, which says that the index has recovered almost two-third of the previous fall.
The momentum oscillator, relative strength index (RSI) has entered into a bullish crossover and is currently staying above the 50 mark. On the options front, 11,000 CE and 10,800 CE have seen highest activity, whereas 10,600 PE and 10,500 have remained most active.
However, the recent upmove in the Nifty has found initial resistance at the falling trend line on the daily chart. A clean takeout of the falling trend line, which is currently pegged at 10,772, is expected to set Nifty for a rally towards 10,830-10,900. If the index does close above 10,900 then it may move towards 11,000 levels.
On the other hand, failure to move above 10,772 may attract selling in the market. On the lower end supports are placed at 10,670/10,550.
Here is a list of top 5 stocks that could return 6-15 percent in the next 1-2 moths:
Lupin Ltd: Buy| CMP: Rs 934.20| Target Rs 1,030| Stop Loss Rs 894| Return 10%
On the daily chart, a breakout of pennant pattern is visible which may propel the stock for a steep rally over the short term. The stock has been consolidating during the last two week which ended in an upward breakout on the weekly view.
On further observation, momentum oscillator, RSI (14) is seen to be in positive divergence on the weekly chart which suggests that in the short to medium term the stock is expected to witness a strong positive momentum.
Weekly RSI is in bullish crossover and is rising with a current reading at 62.14. Traders can accumulate the stock in the range of Rs 930-935 for the target of Rs.1,030 with a stop loss below Rs.894.
BSE Ltd: Buy| CMP: Rs.854.90 | Target Rs.958| Stop Loss Rs.812| Return 12%
On the daily chart, the stock has given a falling trend line breakout which says that the stock has just reversed from its downwards trend.
Also, the stock has moved above the 50% retracement level of the previous fall from Rs 873 to Rs 826. Moreover, the price has moved above 21-DEMA one the daily chart which again indication of positive shift of the trend. Daily RSI (14) has entered in a bullish crossover.Traders can accumulate the stock in the range of Rs.850-855 for the target of Rs.958 with a stop loss below Rs.812.
Maruti Suzuki India Ltd: Buy| CMP: Rs.9,220.80| Target Rs.9,800| Stop Loss Rs.8,943|Return 6%
The price of Maruti has given a breakout from the wedge pattern formed on the daily chart which suggests that the trend has changed to positive from corrective.
In addition, the price has sustained above the 21-DEMA on the daily chart which indicates that the bullish trend is likely to continue in the near to short-term.
Traders can accumulate the stock in the range of Rs.9,180-9,230 for the target of Rs9,800 with a stop loss below Rs.8,943.
JSW Energy Ltd: Buy| CMP: Rs.66.40 | Target Rs.76| Stop Loss Rs.61| Return 15%
On the daily chart, the stock has witnessed highest closing in the last six days which suggests growing optimism in the stock.
In addition, bullish ABCD pattern has formed on the daily chart which indicates a possibility of bullish reversal. Moreover, the price has moved above 21-DEMA on the daily chart which again indication of positive shift of the trend.
Daily RSI (14) is in positive divergence. Traders can accumulate the stock in the range of Rs.65-66.50 for the target of Rs.76 with a stop loss below Rs.61.
Muthoot Finance Ltd: Buy| CMP: Rs.397.35 | Target Rs.445| Stop Loss Rs.377| Return 12%
On the daily chart, the stock has given a falling trend line breakout which says that the stock has just reversed from its downward trend.
Also, the stock has moved above the previous inflection point which suggests growing optimism. Moreover, the price has sustained above its 21-DEMA one the daily chart which again indication of positive shift of the trend. Daily RSI (14) is in positive divergence.
Traders can accumulate the stock in the range of Rs395-398 for the target of Rs445 with a stop loss below Rs.377.
Disclaimer: The author is Head of Wealth Management and Financial Planning, Bonanza Portfolio Ltd. 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.