If the index manages to breach 11000 levels and sustain above that than another round of short covering is expected that may drive Nifty towards 11,200 levels in the coming weeks.
Aditya Agarwal
After 4 days of consecutive up move, Indian markets saw profit booking from higher levels in the last two days of the last week but failed to close above 10,800 levels.
Since the last 2 weeks, Nifty was consolidating in a broad range of 10,600-10,900 levels. From higher levels, long unwinding was seen in banking, cement and oil & gas sector that kept broader markets under pressure.
In the second half of the session, the technology sector saw minor profit booking ahead of the quarterly result of TCS, scheduled to be announced after markets hours.
Overall, technical setup for Nifty remains bullish and after this consolidation, the index is again expected to inch upwards. In the short-term, Nifty will find resistance around 10,900-11,000 range whereas at the same time, put writing at 10,700 will prove as strong support in the short term.
On the higher side, aggressive call writing has been seen at 11,000 strike option and that will act as a stiff supply zone for the Nifty.
However, if the index manages to breach 11,000 levels and sustain above that then another round of short-covering is expected that may drive Nifty towards 11,200 levels in the coming weeks.
Here is a list of top three stocks which could give 8-12% return in the next 1 month:
M&M: Buy around Rs 730-735| LTP: Rs 728| Target: Rs 775-790| Stop Loss: Rs 715| Return 8%
After correcting sharply from its recent high of around 815, the stock took a sharp reversal on back of monthly sales number and nosedived sharply.
Subsequently, the selling pressure exhausted near the 715-710 zones which coincided with the multiple support zone.
On the weekly and monthly chart, the stock has strong trendline support around 700-710 levels and from those levels, the stock is witnessing delivery based buying.
In the short term, we expect a bounce back in M&M and therefore we recommend traders to buy the stock around 730 levels with a price target of 775/790.
Dabur India: Buy around Rs 420-425| LTP: Rs 421| Target: Rs 475| Stop Loss: Rs 400| Return 12%
After testing the strong support zone of 360, the stock rebounded sharply and resumed its uptrend. In that optimism, the stock rallied towards 459.
Subsequently, it witnessed decent profit booking as a result stock descended towards 411. Looking at the daily chart, level of 411 coincided with the 78.6% retracement of its entire swing move joined from the bottom of 395 to the top of 459.
The daily RSI (14) has signaled ‘Positive Reversal’ pattern. The daily higher top higher bottom formation is intact which indicates that the overall trend is still up. Considering the recent consolidation, we believe that the stock is poised for an up move.
Traders can buy the stock around 420 with an upside price target of 473, and a stop loss could be placed at 400.
Sun Pharma: Buy around Rs 440-445| LTP: Rs 443| Target: Rs 480| Stop Loss: Rs 424| Return 8%
After correction from highs of 680, Sun Pharma has been consolidating in a narrow band of 400-440 for last few weeks. This week, the stock broke the range of higher side on the back of short covering followed by fresh long accumulation.
In the last 2 sessions, minor profit booking was seen in the counter, however, our short term outlook remains bullish and therefore we recommend buying Sun Pharma around Rs 440 for targets of Rs 480.
(The author is Head - Technical Research, Way2Wealth Brokers Pvt. Ltd.)
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