Indian market witnessed a volatility week as benchmark indices closed marginally higher but over their crucial support levels. The Nifty50 closed 0.29 percent higher at 9,915 and the S&P BSE Sensex ended above 32,000 for the week ended 21 July.
The Nifty50 index is trading at its all-time high and the recent up move in the index has not been supported by broad market participation which in itself is a concern. It looks like that Indian market might be trading in last leg of its rally, suggest experts.
If we closely observe the Nifty monthly chart, it is seen that the ongoing up move in the Nifty index from the low of 7,894 in Dec 2016 has symmetries with the previous leg of up move in Nifty, wherein the index rallied from 6,825.80 (Feb. 2016) to 8,968.70 (Dec. 2016).
“This previous upmove had seen rally of 2,143 points charted in eight monthly candles. Similarly, if we measure the ongoing leg of the uptrend from the low of 7,893.80 (Dec. 2016), then it is seen that currently this is the eight month of the uptrend and the index has rallied around 2034 points from the low,” Sameet Chavan, Chief Analyst- Technical and Derivatives, Angel Broking told Moneycontrol.
“A 100% extension of the previous up move measured from the low of 7893.80 indicates that the index is unlikely to rally significant from current levels. We believe that the indices are in the last leg of the upmove and we are likely to see a short-term top getting formed hereon,” he said.
For the coming week, Chavan is of the view that the Nifty index has stiff resistance at 9,930. “Even if the index crosses this mentioned resistance, we would see limited upside up to 10,050 and hence, traders should exit from long positions and stay light,” he said.
If the index starts heading south ahead of the expiry then the near-term supports for the coming week are placed around 9,815 and then towards 9,700.
We have collated a list of top five stock ideas which could give up to 14% return in the next 5 sessions to 2 months:
Analyst: Sameet Chavan, Chief Analyst- Technical and Derivatives, Angel Broking
Manappuram Finance: BUY| Target Rs119| Stop Loss Rs97| Return 14%| Time 14-21 sessions
In last few months, this stock has consolidated in a broad range of Rs88-105. The prices are on the verge of a breakout from the resistance end of the mentioned range. In last few sessions, the volumes have increased with upmove in prices, which is a positive sign.
The broader trend of the stock is positive and this breakout could lead to a continuation of the up-trend. The combination of short term moving averages as well as the ‘RSI’ oscillator is hinting at a positive momentum.
Hence, traders are advised to buy this stock at current levels and on declines up to Rs104.50 for a target of Rs119 over the next 14 – 21 sessions. The stop loss should be fixed at Rs97.
IndusInd bank: SELL| Target Rs1518| Stop Loss Rs1599| Return 3%| Time 5-10 sessions
This has been one of the steady outperforming stocks within the ‘Private’ banking space. At present, the stock is trading near its all time high; but, we are now observing a possibility of some short term correction.
It’s very difficult and risky to go against the direction of such kind of outperforming stocks. But, the kind of structure we are observing itself gives contradictory signals. Due to last three months price action, we can see a formation of ‘Wolfe Wave’ on daily chart.
As per the requirement of this pattern, all 5 points are visible and 5th point placement is precisely at ‘Golden Ratio’ (161% Fibonacci Retracement) of the previous down move (from 3 to 4).
The said pattern needs a confirmation of some reversal pattern at the 5th point, which we can see in the form of a ‘Dragonfly Doji’ pattern. Hence, traders are advised to sell this stock at current levels for a target of Rs1518 over the next 5 – 10 sessions. The stop loss should be fixed at Rs1599.
Karnataka Bank: SELL| Target Rs142| Stop Loss Rs161| Return 9%| Time 5-10 sessions
Post a stupendous up move from the levels of Rs100 to Rs180 in a span of less than seven months, the prices have undergone a consolidation phase since last few weeks.
This consolidation phase has led to the formation of a ‘Head & Shoulder’ pattern on the daily chart. The mentioned pattern is a reversal pattern and prices are trading near the neckline of the pattern.
A breakdown from the neckline could lead to a corrective move in the stock in near term. In addition, the ‘RSI – SMOOTHENED’ is already trading in a lower top lower bottom price cycle supporting the bearish view.
Hence, traders are advised to sell this stock below Rs155 for a target of Rs142 in short term. The stop loss should be fixed at Rs161.
Brokerage Firm: SMC Capital
Container Corp: BUY| Target Rs1270| Stop Loss Rs1120| Return 7%| Time 1-2 months
The stock closed at Rs1,180.55 on 21st July 2017. It made a 52-week low at Rs8,44.45 on 21st December 2016 and a 52-week high of Rs1,251.60 on 23rd May 2017. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs1,097.47
After finding support around Rs840 levels, the stock started moving higher and tested Rs1,200 levels in short span of time. Then after, the stock is consolidating in a narrow range of Rs1,140-1200 levels from past few weeks and forming “Bull Flag” pattern on the weekly chart and closed on verge of breakout of the pattern.
Traders can buy in the range of Rs1,165-1,170 levels for the upside target of Rs1,270-1,300 levels with a stop loss below Rs1,120.
Bharti Infratel: BUY| Target Rs460| Stop Loss Rs 375| Return 12%| Time 1-2 months
The stock closed at Rs410.30 on 21st July 2017. It made a 52-week low at Rs281.75 on 28th February 2017 and a 52-week high of Rs424.75 on 18th July 2017. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at 363.59.
The short term, medium term and long term bias is positive for the stock, it was forming an “Inverted Head and Shoulder” pattern on weekly charts, which is bullish in nature. It has given the neckline breakout and trading higher.
Apart from this, it is continuously trading above the 200-WEMA, which also give the positive outlook for coming days. Therefore, one can buy in the range of 400-405 levels for the upside target of Rs450-460 levels with a stop loss below Rs375.