Nifty may rebound to 11,500; bet on DLF, IOC, Maruti for double-digit returns

Shabbir Kayyumi

Bears continued to maintain their stronghold on D-Street as benchmark indices tanked 7 percent in the week ended February 28.

Nifty formed a long body bearish candle and fell below its 200-DMA.

Currently, five week-EMA is around 11,788, and as long as Nifty is trading below these levels, one should trade with 'sell on the rise' strategy.

Shabbir Kayyumi

Head of Technical & Derivative Research|Narnolia Financial Advisors

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• 'Nifty has a strong base around 12,000, but downside seen in Bank index'

However, the index gave a fall of 800 points in a week which has put the majority of the oscillators in oversold zone and relief rally towards 11,625 cannot be ruled out.

Also, Nifty is having a strong demand zone in a range of 11,200-11,100 which has acted as base earlier. Hence, there is a possibility that the current fall could stop and Nifty could bounce back to 11,500 levels.

Bank Nifty

Bank Nifty has formed a long body bearish candle in the week gone by and closed below the crucial support of previous swing low (29,612). Since the majority of the oscillators are in the oversold zone, one relief rally towards 30,000 levels is expected.

Trade recommendation

DLF | Buy around Rs 198 | Target: Rs 235 | Stop loss: Rs 178 | Upside: 18%

The daily chart of the stock reveals demand is increasing and supply is diminishing as stock is taking support from line of parity showing a rebound from its lower levels. A formation of dragonfly Doji near 200-DMA is showing strength from a strong base. As the chart is looking attractive and decent volume participation has been witnessed, we recommend a buy around 198 for a target of 235, keeping the stop loss st 178.

Indian Oil Corporation (IOC) | Buy around Rs 102 | Target: Rs 118 | Stop loss: Rs 91 | Upside: 15%

Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. Currently, it has formed a green candle on the daily chart along with the formation of a hammer on the weekly chart which suggests a reversal is around the corner. Indicators and oscillators also lending support to the price action.

Maruti Suzuki India | Buy around Rs 6,250 | Target: Rs 6,600 | Stop loss: Rs 6,050 | Upside: 5%

It has formed a double bottom on the hourly charts and is undergoing consolidation in the longer time frame. It is on the verge of resuming its prior trend. The crucial resistance of the 50-HMA is on the verge of taken off which indicates short term momentum to the uptrend. The momentum indicator MACD has crossed the signal line indicating a start of a trend. The RSI too is above its key 50 mark indicating positive momentum on its side.

(The author is Head of Technical Research at Narnolia Financial Advisors)