Though the global market setup is not very strong, technical setup for Indian markets indicates a continuation of the bullish trend
Nandish Shah
Nifty continued its upward journey for the second day in the row to end with gains of 52 points at 11,923 on June 10. Moreover, it managed to conquer 5-day exponential moving average (EMA), placed at 11,916. Nifty is currently trading above its 20, 50, 100 and 200-DMA, indicating that the primary trend is bullish.
The index has formed higher tops and higher bottoms on the daily and weekly charts. It formed a ‘Cup and Handle’ pattern on the weekly charts that indicates a continuation of an uptrend.
A 38.2 percent retracement of the 995 point rally from 11,108 to 12,103 comes in at 11,723. Now, a close below this is required for the trend to turn bearish.
Long term target for the Nifty is seen at 12,430, which happens to be 138.2 percent Fibonacci retracement of the entire swing seen from 11,760 (Aug 2018 top) to 10,004(Oct 2018 bottom). As far as support is concerned, it is placed around 11,723 for the Nifty.
Though the global market setup is not very strong, technical setup for Indian markets indicates a continuation of the bullish trend. Traders should remain long on Nifty with the trailing stop loss of 11,723. The next target for the Nifty is seen around 12,100 and 12,430.
Here are three stocks that could return 6-9 percent in the next month:
Bata India: Buy| LTP: Rs 1,421| Target: Rs 1,510| Stop loss: Rs 1,360| Upside: 6 percent
Bata India stock price has given a breakout on the daily chart on June 10 with higher volumes by closing above the resistance level of Rs 1,400.
The primary trend of the stock is positive as the stock price is trading above its 5, 20 and 200-day SMA. After making an all-time high in June, the stock price witnessed a running correction, which we think is a good buying opportunity.
FMCG as a sector is looking good on the charts. In the F&O segment, we have seen an aggressive long build up in the stock. Therefore, we recommend buying Bata India for the upside target of Rs 1,510, keeping a stop loss below Rs 1,360.
Infosys: Buy| LTP: Rs 753| Target: Rs 800| Stop loss: Rs 728| Upside: 6 percent
Infosys has given a bullish breakout from the downward sloping trendline that joins the high of April 9 and June 3. During May, stock price formed a strong base near multiple bottoms around 200-day SMA.
The primary trend of the stock is positive where the price is trading only 2.5 percent below its all-time high level. Oscillators and momentum Indicators like the RSI and MACD are showing strength in the stock on the daily and weekly charts. Therefore, we recommend buying Infosys for the target of Rs 800, keeping a stop loss at Rs 728
Bharti Airtel: Buy| LTP: Rs 363| Target: Rs 394| Stop loss: Rs 345| Upside: 9 percent
Bharti Airtel gave a breakout on the daily chart by closing above the resistance level of Rs 360 to close at 52-week high, recently. The primary trend of the stock is positive as it is trading above its 5, 20 and 200-day SMA.
Oscillators and momentum indicators like RSI and MACD are showing strength on daily and weekly charts.
Bharti Airtel is the best performer amongst the telecom stock and this outperformance is going to continue. Therefore, we recommend buying Bharti Airtel for the target of Rs 394, keeping a stop loss below Rs 345.
The author is Senior Technical & Derivatives Analyst, HDFC Securities.
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