Hot Stocks: 'Bullish belt hold pattern suggests strength in Mahanagar Gas, can buy around Rs 970'

Shabbir Kayyumi

Rising cases of coronavirus in India and weak global sentiments pushed benchmark index Nifty lower towards 11,000 mark. Bears took complete control of the index as it closed below 11,000 psychological mark after developments around Yes Bank.

Markets continued to extend its losing streak for the fourth straight week as index fell almost 2 percent in the week ended March 6.

Shabbir Kayyumi

Head of Technical & Derivative Research|Narnolia Financial Advisors

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Recently, Nifty broke out from an inverted cup and handle pattern from its neckline (11,625) to reach the target of 10,900 last Friday. This concluded the technical downside and chances of bouncing back cannot be ignored.  Also, the middle line of Andrew pitchfork drawn from swing highs is also coming near 10,900 levels and a majority of times, prices halt near the middle line which is also hinting strong support near 10,900 mark.

Moreover, 5 weeks EMA is trading around 11,550, and as long as Nifty is trading below these levels, one should trade with sell on rise strategy. However, the index has given a fall of 1,200 points in the last 2 weeks which has put majority of the oscillators in oversold zone and relief rally towards unfilled gap territory (11,450) cannot be ruled out.

A decisive close below ascending trend line support around 10,900 can drag index towards swing lows (10,650) on the downside; however fresh positional shorts should be restricted, as the index is quite oversold.

Bank Nifty

Bank Nifty continued to extend its losing streak for the fourth straight week as intensified selling of almost 1,500 points was seen on the last trading session. Bank Nifty has closed below the crucial support of 28,000 and previous pivot low (28,570). However, the majority of the oscillators are in the oversold zone, one relief rally towards 29,600 levels cannot be ruled out.

Here are three stocks which can give 11-22 percent return in short term:

JSW Steel: Buy Around Rs 225 | Target: Rs 275 | Stop Loss: Rs 190 | Upside: 22 percent

The stock witnessed sustained sell-off over the past few days. However, the strong demand zone around Rs 190-195 has emerged as the support for the same. On the weekly chart, line of polarity suggests strong base and until this breakS decisively, bias will remain positive. We expect the stock can perform going ahead and recommend buying in stock around Rs 225 with a stop loss of Rs 190 for the target of Rs 275.

Mahanagar Gas: Buy Around Rs 970 | Target: Rs 1,120 | Stop Loss: Rs 900 | Upside: 15 percent

After hitting the peak of Rs 1,235, the stock slipped till Rs 952 from where chances of developing demand are higher and prices took support from its 200-day SMA's on the daily chart. As of now, the appearance of Bullish Belt Hold on the daily chart is giving cues to accumulate this stock at lower levels.

The momentum oscillator RSI is currently overbought & took a turn on the north side. As long as it sustains above Rs 900 mark, the possibility of moving on the upside is higher and it can hit our target with ease. Buy MGL around Rs 970 with a stop loss of Rs 900 targets of Rs 1,120.

Coal India: Buy Around Rs 168 | Target: Rs 188 | Stop Loss: Rs 154 | Upside: 11 percent

Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. Currently, it formed double bottom on daily chart along with positive divergence in RSI which suggests reversal is around the corner. Indicator and oscillators are also lending support to the price action. Trader can take entry from the level of Rs 168 for the target of Rs 188 while keeping stop loss of Rs 154.

(The author is Head - Technical & Derivative Research at Narnolia Financial Advisors.)

Disclosure: Narnolia Financial Advisors Ltd. /Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks. The stocks recommended are based on our analysis which is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.