We expect a near-term bounce in the index; however, such bounce will not lead to a significant trend reversal and any up move towards 10400-10480 levels can be used to exit from trading long positions.
The Nifty resumed its downtrend after a broad consolidation and eventually took out the swing low of 10,276.30 in Tuesday’s session. This triggered further pessimism and the index nosedived sharply towards its next crucial support of 200-DMA which is seen around 10,130-10,140 zone.
In Thursday’s session, short covering was seen in banking and selected heavyweight stocks near the crucial support level of 200-DMA that helped Nifty to close above 10,200 levels.
The hourly momentum oscillators are trading well inside the oversold territory and are indicating towards a further pullback on the higher side.
We expect a near-term bounce in the index; however, such bounce will not lead to a significant trend reversal and any up move towards 10,400-10,480 levels can be used to exit from trading long positions.
At this juncture, 10,130 which coincides with the 200-DMA will act as an immediate support level for the index and if it trades below this level will drag index lower towards its weekly swing low of 10,033.35 which is a crucial support.
On the other side, 10,276 which was earlier acting as a strong support has reversed its role and is likely to act as an immediate hurdle above which the strong resistance is placed near 10,360.
Here is a list of top 4 stocks which could give up to 9% return in the next 15-21 sessions:
Reliance Industries Ltd: Sell around 920 – 925| Target 840| Stop Loss 960| Timeframe 15 to 21 sessions| 8%
On the weekly charts, the stock has formed a classical head and shoulder formation and is currently the right shoulder which is in the process of making.
The neckline of this pattern is pegged near 871 and any decisive move below 871 will eventually confirm the breakdown from said pattern. The weekly RSI (14) indicates the possible range shift.
The weekly Bollinger Band has compressed significantly hence volatility is likely to increase in the coming trading session. Therefore, we advocate traders to build a short position in this stock in a range of Rs920 to 925 with a price target of Rs840 and a stop loss placed above Rs960.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Hindalco Industries Ltd: Sell around 225 – 230| Target 205| Stop loss 238| Timeframe 15 to 21 trading sessions| Return 8%
Looking at the weekly chart, the stock confirmed its breakdown from the Double Top pattern as the neckline of the said pattern was placed near 232.
Along with its Double Top breakout, the stock also broke below its 200-DMA which supports the hypothesis. On the daily chart, the stock closed below the upward sloping trend line drawn from the bottom of around 63.
Hence, we expect this stock to see further correction in the near term. We recommend traders to go short in a range of 225 to 230 with a price target of 205 and a stop loss placed below 238.
HUL: Sell around 1293 – 1300| Target 1225| Stop loss 1330| Timeframe 15 to 21 trading session| Return 5%
Looking at the daily chart, the stock broke the upward sloping trend line joining from the bottom of 1057. Also, the stock broke the higher top higher bottom sequence which doesn’t bode well in the near term.
The stock is trading well below the 89-EMA. Thus, we recommend traders to build a short position in a range of 1293 – 1300 levels with a downside price target of 1225 and a stop loss placed below 1330.
Cholamandalam Investment & Finance Company: Buy around 1415 – 1400| Target 1550| Stop loss 1360| Timeframe 15 to 21 trading session| Return 9%
Looking at the daily chart, the stock is trending in a rising channel formation and recently the stock precisely tested the lower band of the channel pattern and rebound sharply.
Also, Thursday’s low of 1392 coincided with the 50% of its previous daily swing low. Hence, we recommend traders to buy this stock in a range of 1415 – 1400 with a price target of 1550 and a stop loss placed below 1360.
MORE WILL UPDATE SOON!!
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