Upside for Nifty is expected to be capped on a short-term basis. We remain selective on specific stocks only and avoid aggressive long positions.
Despite outlining government’s measures to strengthen domestic currency and narrow current account deficit, the India equity market continued to witness a volatile trade regime on a range-bound level.
Further, the roll out from US administration to impose 10 percent tariff on Chinese imports continued to dent market sentiment, and once again the index breached below psychological levels 11,500 earlier in the week on Monday.
The Nifty index slipped from its important support level of 11,350-11,300 to touch a weekly low of 11,250 levels over a sustained selling pressure towards the closing hour.
Although the index rebounded marginally during the weekend session, it consolidated over the last two days to close at 11,278.90 levels, down by about 0.08 percent on a week-to-week basis.
The drag dominantly came from PSU Banks and Auto index which was down by 5.81 percent and 2.57 percent, respectively. The FMCG index was the top gainer with about 0.33 percent on the weekly basis.
After making a correction for two consecutive sessions to slip below important level of 11,300 levels coupled with a breach below 5-20-days EMA levels, the index formed a solid bearish candlestick pattern on its weekly price chart, indicating a selling regime.
The weekly RSI on chart stood at 59 levels indicating no major divergence in price, while the MACD continues to trade above the Signal-Line. The immediate hurdle for the index is currently placed at 11,523 and the next important support level is placed at 11,176.
The continuation of negative sentiment over falling rupee coupled with the weakening of global sentiment as trade tariff battle continues to escalate between the two giant economies of the US and China.
As internal advance-decline ratio continues to indicate a negative setup for the domestic market, the sideways direction favouring the downside regime is expected to keep the index range bound.
As an upside for the index is expected to remain capped on a short-term basis, we remain selective on specific stocks only and avoid aggressive long position. We maintain a range bound trade for the index at 11,520 levels on the upside and 11,237 levels on the downside.
Here is a list of top three stocks which could give 5-11% return in next 1 month:
Bhansali Engineering Polymers: Buy| LTP: Rs 137.05| Target: Rs 152 | Stop Loss: Rs 122 | Return: 11%
Bhansalli Engineering witnessed a sharp correction in the last six-month from a price band of Rs 217-160 towards Rs 125-120 levels, taking a strong support at Rs 111 levels.
Although it witnessed a periodic correction on a closing basis, the scrip recently witnessed an upward trajectory after bottoming out at Rs 120 levels and thus indicating a decisive buying trend at current levels.
The momentum indicator outlined a positive trend with weekly RSI inching at 58 levels. Further, in the coming session MACD is also likely to make a bullish crossover to trade above Signal-Line. We have a buy recommendation for Bhansalli Engineering which is currently trading at Rs 136.65.
Bajaj Corp: Buy| LTP: Rs 456.65| Target: Rs 490| Stop-Loss: Rs 425 | Return: 7%
Bajaj Corp made a strong rebound on its six-month price chart after consolidating in a range of Rs 496-476. It made a low of Rs 395 levels and managed to breakout from its crucial level of 100-days EMA levels placed at Rs 430.
The scrip touched a high of Rs 468 levels despite closing marginally below with gain of 6.73 percent on an intraday basis, and saw a significant volume build up against its average level in the previous trading session.
The weekly RSI level at 57 has shown a positive price divergence while MACD indicates a likelihood of bullish crossover in the next few sessions. We have a buy recommendation for Bajaj Corp which is currently trading at Rs 457.55.
Tata Motors: Sell| LTP: Rs 252| Target: Rs 240| Stop Loss: Rs 268| Return: 5%
Despite a periodical reverse trend, Tata Motors continues to remain under selling pressure on a weekly basis. It consolidated from a higher band of Rs 364 levels towards low of Rs 248 levels during the last six months.
It further slipped below from its 200-100-days moving-average level placed at Rs 383-370 levels to decline about 9 percent on weekly basis and thus indicating a short-term pressure on price.
The RSI on chart stood at 35 levels while MACD trading below its Signal-Line, indicating selling regime. We have a sell recommendation for Tata Motors which is currently trading at Rs 251.50
MORE WILL UPDATE SOON!!
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