The F&O expiry week and negative divergence coupled with small real bodies sharp and sudden corrections cannot be ruled out.
The Nifty 50 index has entered into a sideways consolidation phase as it is approaching resistance of 10,640 being the recent peaks. The Upper end of the range is placed at 10,600-10,640 and the lower end of the range is placed at 10,500 levels.
Failure to cross this resistance can lead to corrections to levels of 10,430-10,320. However, a breakout above 10,640 can take the Index to 61.8 percent Fibonacci retracement level placed at 10,718 and 78.6 percent Fibonacci level placed at 10,925.
Moreover, within the trading range, the real body movements are diminishing suggesting lack of participation. On the shorter time frame, RSI has started forming negative divergences suggesting maturing uptrend.
Therefore, keeping in mind, the F&O expiry week and negative divergence coupled with small real bodies sharp and sudden corrections cannot be ruled out.
Here is a list of top three stocks which could give up to 12% return in 3-4 weeks:
ICICI Prudential Life Insurance: Rating: BUY | Target: Rs 445 | Stop loss: Rs 363 | Return: 6%
On the weekly chart, ICICI Prudential Life Insurance is on the verge of a breakout from a channel pattern placed at Rs 395 after taking support at the 89 percent Fibonacci retracement level placed at Rs 370 (as indicated on chart). A sustained trade above Rs 395 can trigger a breakout from the channel resuming uptrend.
On the daily chart, the stock has formed a sizeable bullish candle with healthy volumes suggesting higher levels in the coming trading sessions.
Moreover, RSI has witnessed a range shift after taking support at the 40-level entering the bull zone affirming bullishness. The stock may be bought in the range of Rs 385-390 for targets of Rs 425-445, keeping a stop loss below Rs 362.
Caplin Point Laboratories: Rating: BUY | Target: Rs 675 | Stop loss: Rs 560 | Return: 12%
On the weekly chart, Caplin Point Laboratories is on the verge of a breakout from the channel pattern placed at Rs 633. Breakout with healthy volumes can trigger a bear trend reversal.
On the daily chart, stock has broken out from a Pennant pattern after taking support at the 50 percent Fibonacci retracement level suggesting further upside in the stock.
The RSI has turned upwards breaking out of the upper Bollinger Bands suggesting extended bullishness in the coming trading sessions. The stock may be bought in the range of Rs 596-602 for targets of Rs 655-675, keeping a stop loss below Rs 560.
Cadila Healthcare: Rating: BUY | Target: Rs 450 | Stop loss: Rs 370 | Return: 11%
On the weekly chart, Cadila Healthcare has turned upwards after taking support at the 50 percent Fibonacci retracement level placed at Rs 382 indicating higher levels in the coming trading sessions. Further, a sustained trade above Rs 403 can extend the uptrend taking it higher.
On the daily chart, the stock has broken out from a consolidation phase on good volumes confirming the bullishness building up in the stock. The RSI has entered in the bull zone after bearing out of broken out from upper Bollinger Band.
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