Short-term pullback to drive Nifty towards 10,570; 3 top stocks which give up to 12% return

Taking slightly contra view on index and expect Nifty index to see a short-term pullback from current level. Till the time Nifty is trading above 10033.35, the Higher Top Higher Bottom formation on weekly chart remains intact. On weekly charts, RSI (14), has signaled an oversold condition post the formation of a bearish divergence.

The benchmark indices extended the ongoing pessimism and the bears tried to break the recent swing low of 10,276 in early part of the week. However, bulls managed to defend this level and thereafter index eventually slipped into a consolidation.

Looking at the daily chart, we are taking slightly contra view on index and expect Nifty index to see a short-term pullback from current level. Till the time Nifty is trading above 10,033.35, the Higher Top Higher Bottom formation on weekly chart remains intact. On weekly charts, RSI (14), has signaled an oversold condition post the formation of a bearish divergence.

Also, on a weekly line chart, in the last two weeks Nifty precisely closed near its previous resistance zone of November 3, 2017. Hence, we are meticulously tracking  Friday’s closing as any close near or above 10,450 indicates that the index is poised for a sharp bounce. In that case, we may see Nifty to rally towards 10,575 and 10,640 levels respectively.

On the flip side, the above hypothesis will be negated if Nifty breaks and closes below 10,276 in that case possibility of testing the swing low of 10,033.35 can’t be ruled out.

However, the expected pullback will be short term in nature and we don’t advise traders to go aggressive long in Nifty. Rollovers figure suggest that heavy short positions have got rolled in March series and the way March series future premium have reduced in yesterdays session clearly indicates that at higher levels markets will remain under selling pressure.

Here are the lists of 3 stocks which can return up to 12%

Coal India: Rating: Buy around Rs 310-307 | Target: Rs 338 | Stop loss: Rs 297 | Time frame | 15-21 sessions | Return: 8%

After sharp run-up from the bottom of around Rs 262, the stock rallied till Rs 311. Subsequently, it slipped into consolidation which led to a formation of triangle pattern. Recently, stock confirmed its breakout from the said triangle pattern.

The stock saw acceleration in volume activity that support our hypothesis. The weekly Higher Top Higher Bottom formation indicates the primary trend is up. Hence, we recommend traders to buy this stock in a range of Rs 310–307 with price target of Rs 338 and stop loss placed below Rs 297.

Hexaware Technologies: Buy around Rs 350-345 | Target: Rs 394 | Stop loss: Rs 323 | Time frame: 15-21 trading sessions | Return: 12%

Recently, the stock has seen sharp profit booking and corrected till Rs 323. Subsequently, it saw decent consolidation and post that stock resumed its trend. On a weekly chart, the RSI (14) has indicated oversold condition. The Higher Top Higher Bottom formation is still intact. Hence, we advocate traders to buy this stock in a range of Rs 350-345 with a price target of Rs 394. Stop loss should be kept below Rs 323.

Tata Steel: Sell around Rs 640-644 | Target: Rs 590 | Stop loss: Rs 665 | Time frame: 15-21 trading sessions

Looking at the daily chart, stock failed to surpass its previous swing high of Rs 748 and took sharp turn from Rs 720. In the process, the daily chart formed a bearish head & shoulder pattern on daily chart. Currently, the stock is trading near the neckline of the pattern however the hourly chart indicates the possibility of further correction. Hence, we advice traders to go short in this stock with a price target of Rs 590. Stop loss should be placed at Rs 665.

MORE WILL UPDATE SOON!!