For the rally to sustain, the index needs to close above 11,150-11,181 on a sustainable basis for any bounce back towards 11,350 levels.
The holiday truncated week got off to a bad start on August 12, amid weak global cues and domestic slowdown worries. However, we saw some respite on August 14 as the Sensex rallied more than 350 points. Nifty too closed above the psychological 11,000 mark.
Earlier this week, the Nifty reversed from its 200-days moving average, which stands at 11,667 levels, and falling resistance trend line connecting the highs of 11,982 and 11,707, reaffirming the downtrend.
For the rally to sustain, the index needs to close above 11,150-11,181 on a sustainable basis for any bounce back towards 11,350 levels.
On the downside, the market has critical support placed at 10,782, which is the 61.8 percent Fibonacci retracement of the entire rise from 10,005 to 12,103.
If the index breaks below 10,782, a further decline can be seen towards 10,580 levels. In Nifty options, maximum Put open interest is seen at the 11,000 strike, followed by 10,700. Maximum call open interest is seen at 11,000, followed by 11,500.
Here is a list of top five stocks that could return 8-11 percent in the next one-to-three months:
HDFC AMC: Buy| LTP: 2,200| Stop Loss: Rs 2,130| Target: Rs 2,450| Upside 11%
The stock is in an uptrend forming high tops and higher bottoms since its February low of Rs 1,329 on the daily chart. The up moves seen in the stock have been backed by good volumes and declines on below-average volumes indicating buying participation in the stock.
It recently touched an all-time high of Rs 2,370 and then corrected towards Rs 2,045 levels. MACD line has given a positive crossover.
Thus, the stock can be bought at current levels and on dips towards Rs 2,195 with a stop loss below Rs 2,130 and a target of Rs 2,450 levels.
Pidilite Industries: Buy| LTP: Rs 1346| Stop Loss: Rs 1300|Target: Rs 1,500| Upside 11%
The stock is in an uptrend forming higher tops and higher bottoms on the weekly chart. The stock hit a high of Rs 1313 in April and then consolidated in the range of Rs 1,313 and Rs 1,100 odd levels to form ascending triangle pattern.
Last week, the stock witnessed a breakout from the consolidation zone on strong momentum and high volumes indicating buying participation.
The price has given a breakout on the upside from the Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of breakout on the weekly chart.
The Average Directional Index (ADX) line, an indicator of trend strength has moved above the equilibrium level of 20 with rising Plus Directional line on the daily chart.
MACD line has given a positive crossover with its average above the neutral level of zero on the weekly chart. Thus, stock can be bought at current levels and on dips towards Rs 1,325 with a stop loss below Rs 1,300 and a target of Rs 1,500 levels.
Avenue Supermarts: Buy| LTP: Rs 1,490| Stop Loss: Rs 1,405| Target: Rs 1,610| Upside 8%
The stock has been moving higher since March along the rising support trend line connecting closing price of Rs 1,234 and Rs 1397.
The stock has seen a bounce back from the trend line support with long body bullish candle and good volumes.
It has formed a base after consolidating between Rs 1530 and Rs 1230 odd levels. Also looking at higher time frame weekly chart, it looks like that the stock is in a process of forming a double bottom pattern with lows at Rs 1230 odd levels.
Stochastic has given positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,440 with a stop loss below Rs 1,405 and a target of Rs 1,610 levels.
MORE WILL UPDATE SOON!!
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