One could be long on Nifty with the stop loss of 11,500. A breach above 11,761, could push Nifty towards targets 12,000 and 12,430
Nandish Shah
Nifty has fallen more than 150 points from the all-time high level of 11,761 made last week to close at 11,605 on April 8.
During the last week, the Nifty formed a Doji candlestick pattern on the weekly charts, indicating indecision among the bulls and the bears.
However, a breakdown below the weekly low of 11,559 would activate the bearish implications of the possible short-term bearish trend reversal.
Moreover, 20-day SMA is currently placed around 11,500. In the derivatives, we have seen Put writing at 11,500 strike price.
All these Indicators put 11,500-11,550 as strong support zone. Unless this support of 11,500 is breached decisively, the trend of the market would remain bullish.
The target for the Nifty in the current bull run could be as high as 12,430, which is 138.2 percent Fibonacci retracement of the entire swing seen from 11,760 (Aug 2018 high) to 10,004 (Oct 2018 bottom).
However, this bull run could be peppered by corrections at regular intervals. Meanwhile, quarterly results will start streaming in earnest this week with the IT companies setting the tone.
Bank Nifty witnessed correction of more than 800 points from the all-time high of 30,648 made during the last week. The 20-days simple moving average (SMA) is placed around 29,650. One can remain long in the index with a stop loss of 29,650 on the closing basis. Bank Nifty is expected to reach a target of 31,000 in the short-term.
To conclude, one could be long on Nifty with the stop loss of 11,500. A breach above 11,761, could push Nifty towards targets 12,000 and 12,430. One can be long on Bank Nifty with a stop loss of 29,650, for the upside target of 31,000.
Here are three stocks that could return 8-10 percent in 1 month:
HSIL: Buy| Target: Rs 305| Stop loss: Rs 264| Return: 9 percent
During the last week, the stock price has broken out by closing above the resistance level of Rs 270. The primary trend of the stock is bullish with stock price trading above its 200-day SMA.
Oscillators and momentum indicators have turned bullish on the weekly charts. After giving a breakout last week, the stock price has been consolidating in the narrow range since last few days. It is a buying opportunity. Therefore, we recommend buying HSIL for the target of Rs 305 with a stop loss at Rs 264.
Suven Life Sciences: Buy| Target: Rs 290| Stop loss: Rs 255| Return: 8 percent
Suven gave a breakout on the daily chart on April 8 by closing above Rs 268 with higher volumes. The stock price closed at a six-month high.
The primary trend of the stock is bullish where the stock price is trading above its 20, 50 and 200-day SMA. The momentum indicators and oscillators like RSI and MACD have turned bullish on the weekly charts.
Therefore, we recommend buying Suven at CMP of Rs 268 and average at Rs 262 for the target of Rs 290. Investors can keep a stop loss at Rs 255.
RCF: Buy| Target: Rs 67 | Stop loss: Rs 57| Return: 10 percent
After consolidating in a narrow range for the last one month, the stock price has given a breakout on the daily chart on April 8 by closing above Rs 60 with higher volumes.
RSI and MACD have turned bullish on the daily and weekly charts. The next meaningful resistance comes around 200-day SMA, which is placed at 63.20.
Once it manages to surpass that level, the stock is likely to touch Rs 67. Therefore, we recommend buying RCF for the target of Rs 67 and keep a stop loss at Rs 57.
The author is Senior Technical & Derivatives Analyst, HDFC Securities.
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