Use pullback rallies to short Nifty; 3 stocks which could give up to 11% return

We expect any bounce back to be mild and short-lived since any retracement will be utilized by lead players who will further jump and cap upside.

  

The Nifty gave a decisive breakout of a Flag pattern that was in place for a month, coupled with negative domestic cues that aided the sentiments of bears.

After a month, consolidation came to an end with this breakout as Nifty hits a fresh low of 2018 and closed at the lowest level in 10,249 on Tuesday. The Bank Nifty followed the path with a decisive break and ending down at 24,448 after hitting a low of 24,362.

A lot of cues, fundamentally or economically, affected the market and primary bulls in the last few weeks. It started off with the global sell-off, correction, and as soon as Nifty was trying to form a base, we witnessed a Banking scam which is widespread to other banks tanking the PSU bank Index more than 20 percent.

Further, a trade war recently announced to fetch a favorable deal in NAFTA further fueled the heavyweight sector like metals which bend down to bears tune.

While in due course of time all the good news related to GDP, PMI and IIP have been absorbed on the domestic front. A flag pattern breakout is seen on the daily chart. It is a continuation pattern out of which we have seen a breakout in a favorable direction of previous swing, bearish.

The flag pattern is a very reliable pattern and thus further indicates the momentum may continue, as we earlier mentioned, towards a deeper cut in prices.

Secondly Nifty has been below its short-term moving averages (MA) and this time it is below its crucial 100-day MA which it was long-standing for a year.

Thirdly, we also see two heavyweight sectors like banking and metal in stress due to recent news flow. While on flipside, the currency market is showing a weakness in rupee, which will further aid overall bearish scenario in coming sessions.

We expect any bounce back to be mild and short-lived since any retracement will be utilised by lead players who will further jump and cap upside. We maintain sell on any rise strategy for lower targets of 10,050 - 9,850.

Here is a list of top three stocks which could give up to 11% return in the short term:

Biocon Ltd: BUY| Target Rs 660| Stop Loss Rs 610| Return 4%

The stock is seeing some bit of consolidation after the recent upward move while a bullish continuation flag is seen which provides an opportunity to rise the primary trend for an upside target towards Rs660 while a stop loss can be placed at Rs610.

NTPC Ltd: BUY| Target Rs 173| Stop Loss Rs 158| Return 6%

The stock is seeing a bottom formation on the daily chart as its trying to reverse from an oversold territory.

The oscillators that gauge momentum are displaying a bullish momentum and a positive divergence that may keep price upward in short-term with a retracement to Rs173 while a stop can be placed at near support of Rs158.

Godrej Consumer Products Ltd: BUY| Target Rs1210| Stop Loss Rs1055| Return 11%

Godrej has given a bullish breakout as per candlestick patterns after a decent pullback in price. On the chart, the trend is positive with prices making higher high and low while volume has also seen a surge in prices coming out of consolidation.

We expect the momentum to continue with next resistance at 1210 while a near-term support at 1055 can be seen as a stop.

MORE WILL UPDATE SOON!!