10,700 will act as resistance in April expiry; 5 stocks which could give up to 14% return

The immediate support is seen around 10,451 (100DMA) and 10,400 levels. According to daily Pivot charts, the key support level is placed at 10,509, followed by 10,470. If the index starts moving upwards, key resistance levels to watch out for are 10,574 and 10,600.

  

The NSE equity benchmark Nifty50 continued its positive momentum and ended in green for the ninth consecutive trading session. The index continued to trade above 10,500, took some support on the back of forecast of normal monsoon for the year 2018-19, which will be a positive boost for the rural economy.

On Tuesday, after a gap-up opening, markets largely remained range-bound for the most part of the day, but managed to close with a modest gain of 0.19 percent at 10,548.70; forming a 'Hanging Man' kind of pattern on the daily scale on Tuesday.

If the Nifty50 manages to hold and sustain above 10,561-mark (50 percent retracement of January to March downfall) in the next few trading sessions, it can move higher till the resistance levels of 10,632 and then till 10,705 levels (61.8 percent retracement of January to March correction).

The immediate support is seen around 10,451 (100DMA) and 10,400 levels. According to daily Pivot charts, the key support level is placed at 10,509, followed by 10,470. If the index starts moving upwards, key resistance levels to watch out for are 10,574 and 10,600.

The Relative Strength Index – RSI on the Daily Chart is at 62.61; showing an upward momentum and MACD just entering above the zero line with positive crossover, which indicates that the bias could remain bullish for the next few trading sessions.

On the Options front, maximum Call open interest of 46.74 lakh contracts is seen at strike price 10,700, followed by 10,500 which now holds 39.40 lakh contracts and maximum Put open interest of 53.42 lakh contracts is seen at strike price 10,400, followed by 10,300 which now holds 49.80 lakh contracts.

As per the options data, immediate support is placed around 10,400 levels, whereas 10,700 will act as a stiff resistance in April expiry.

The India VIX ends down by 1.53 percent at 14.04 and is now trading around the crucial levels of 14. This cooling down of VIX indicates a positive signal for nifty to inch upwards in upcoming trading sessions.

Here is a list of top 5 trading ideas which can give up to 14% return in the short term:

NOCIL Ltd: BUY | Close: Rs 226.50 | Target: Rs 259 | Stop loss: Rs 209 | Return: 14.35%

On the weekly chart, the stock has given a breakout of its upper band of Symmetrical Triangle formation with higher volumes. The weekly Relative strength index (RSI) is showing an upward momentum and MACD is continuously trading above zero line with positive crossover whereas +DI is continuously trading above –DI.

Based on the above-mentioned observations positional traders can buy the stock in the range of Rs 224-227 with a stop loss below Rs 209 (closing) for the target of Rs 259.

Tata Global Beverage: BUY | Close: Rs 280.95 | Target: Rs 320 | Stop loss: Rs 259 | Return: 13.90%

The stock has given a consolidation breakout above Rs 279-280 levels on the daily scale with moderate volumes.

The Daily Relative Strength Index (RSI) is showing an upward momentum and the MACD is trading with positive crossover whereas +DI is continuously trading above –DI, which indicates that the stock has the potential to move higher from current level.

Traders can buy the stock in the range of Rs 278-281 with a stop loss below Rs 259 (closing) for the target of Rs 320.

Bajaj Auto Ltd: BUY | Close: Rs 2864.20 | Target: Rs 3030 | Stop loss: Rs 2770 | Return: 5.79%

The stock has given a consolidation breakout above Rs 2827-2830 level on the daily scale with higher volumes. The Daily Relative Strength Index (RSI) is making a higher bottom and higher top. MACD is trading with a positive crossover below the zero line and stochastic indicator gives positive divergence.

Based on these observations, positional traders can buy around current level and add on dips around Rs 2845-2850 with a stop loss below Rs 2770 (closing) for a target of Rs 3030.

Asian Paints Ltd: BUY | Close: Rs 1176 | Target: Rs 1236 | Stop loss: Rs 1138 | Return: 5.1%

In weekly scale, the stock has given a breakout from descending channel pattern above Rs 1169-1170 levels on Monday.

The Weekly Relative strength index (RSI) is showing an upward momentum and MACD is trading with a positive crossover but still sustaining below zero line whereas +DI continuously is trading above –DI.

Traders can buy the stock in the range of Rs 1270-1276 with a stop loss below Rs 1138 (closing) for a target of Rs 1236.

Divi's Laboratories Ltd: BUY | Close: 1180.55 | Target: Rs 1260 | Stop loss: Rs 1130 | Return: 6.73%

The stock has given a breakout from ascending triangle pattern above Rs 1142-1143 levels on Monday with moderate volumes in the weekly scale.

The Weekly Relative strength index (RSI) and OBV — On Balance Volume, are showing an upward momentum and the MACD is continuously trading above zero line with a positive crossover which indicates that the stock has the potential to move higher.

Traders can buy around current level, accumulate on dips around Rs 1160-1165 with a stop loss below Rs 1130 (closing) for the target of Rs 1260.

MORE WILL UPDATE SOON!!

10,000-10,300 could be bottom for Nifty, earnings have to deliver to match high valuations: JP Morgan

He feels domestic liquidity may be partially disturbed in near term due to change in taxation and rising bond yields; but he expects SIP and provident fund flow to continue going ahead.

  

Bears remained in charge at Dalal Street on Monday as well. The Sensex fell more than 500 points in opening trade, taking total two-day losses to more than 1,300 points, but it showed some recovery from that opening lows.

Bharat Iyer of JP Morgan, personally, feels Nifty could be bottomed out at 10,000-10,300 levels and the next month could be challenging for India as well as globe.

It meant the market can fall further from here on, though the intermittent recovery could be possible as Iyer feels the current fall is definitely a buying opportunity for investors who missed the bus earlier.

Broader markets have been hitting hard but that does not mean the end of bull market, he said, adding we are getting into matured phase of bull market.

Valuations definitely picked up in last six months on easy monetary policy and pick up in economic growth, but earnings will have to do tough jobs to prove valuations, Iyer said.

On earnings, in an interview to CNBC-TV18, Bharat Iyer said earnings picture is still frothy. The research house expects 14-15 percent growth in second half of FY18 against earlier 25-30 percent growth, so the financial year 2017-18 growth could be around 8-10 percent.

Globally, he said, earnings and economic growth are picking up. The research house expects US Federal Reserve to do four rate hikes but market priced in only 2, he said.

As he said it is definitely a buying opportunity and we are in bull market correction, he advises taking exposure to financials with solid growth, cement, tractor, construction equipment etc.

He feels urban consumption theme has long way to perform and there is a little bit of cognisance of cost of capital which has been rising.

He is neutral on rural focussed themes like two-wheeler space. If they deliver 8-10 percent volume growth then that could be good, he said. "Don't chase these stocks at these levels."

On Budget 2018 front, he said most countries in the world do have long term capital gains tax of 15-20 percent and in comparison to that, India is still better at 10 percent.

He feels domestic liquidity may be partially disturbed in near term due to change in taxation and rising bond yields; but he expects SIP and provident fund flow to continue going ahead.

MORE WILL UPDATE SOON!!