Ashish Chaturmohta
On October 23, the Nifty closed flat at 11,604 after trading in range of 100 points for the day. Broader market indices BSE Midcap lost 0.08 percent, while Smallcap saw a gain of 0.25 percent for the day. Market breadth on NSE was neutral with advance-decline ratio of 1:1 ratio.
For the day, index has formed a Doji candle which is sign of indecision. Nifty is facing resistance at 11,700 levels where previous swing highs are seen. Thus, it needs to cross above 11,700 levels on sustainable basis for market to rally towards 12,000-12,100 zone. If index start to trade below 11,550 levels, correction towards 11,450-11,400 can be seen. However, on the downside 11,100-11,060 is the critical support zone for the market now.
In Nifty October monthly expiry options, maximum open interest for Put is seen at strike price 11,000 followed by 11,500; while for Call maximum open interest is seen at 12,000 followed by 11,700.
Nifty Put-Call option distribution data is suggesting is support at 11,400 levels and resistance at 11,800 levels.
India VIX declined by 1.64 percent to close at 16.54 level for the day. VIX continues to be in sideways range of 16 to 18 odd levels. It needs to move below 16 for market up higher. However moving above 18, could lead to profit booking in market.
Here are the top 5 stock recommendations which could give 8-16% return in the next one-three months:
Voltas | Rating: Buy | CMP: Rs 708 | Stoploss: Rs 675 | Target: Rs 800 | Return: 13 percent
Stock hit high of Rs 675 in December 2017 and then went into correction mode to touch low of Rs 472 levels in October 2018. For almost two years the stock has witnessed consolidation between Rs 675 and Rs 472 levels to form rounding bottoming out pattern on weekly chart for next leg of rally.
On the shorter-term time frame stock has been consolidating at the breakout level of the pattern and showing breakout on upside. Price has given breakout on upside from Bollinger Band with expansion of bands indicating continuation of trend in the direction of breakout on daily chart.
The Average Directional Index (ADX) line, indicator of trend strength has moved above equilibrium level of 20 with rising Plus Directional line on weekly chart. Thus, stock can be bought at current levels and on dips to Rs 695 with stop loss below Rs 675 for target of Rs 800 levels.
ICICI Lombard General Insurance | Rating: Buy | CMP: Rs 1,296| Stoploss: Rs 1,240 | Target: Rs 1,470 | Return: 13 percent
Since June this year, the stock has witnessed consolidation between Rs 1,265 and 1,050 odd levels. During the consolidation, it has formed higher lows leading to ascending triangle pattern formation on daily chart. Stock has seen bounce back from 100-day moving average, which been acting as support for the stock, and is heading higher. Now stock has shown breakout on upside indicating start of fresh uptrend after consolidation at higher levels.
Price has given breakout on upside from Bollinger Band with expansion of bands indicating continuation of trend in the direction of breakout on daily and weekly chart. The Average Directional Index (ADX) line, indicator of trend strength has turned up from equilibrium level of 20 with rising Plus Directional line on weekly chart. Thus, stock can be bought at current levels and on dips to Rs 1,275 stop loss below Rs 1,240 for target of Rs 1,470 levels.
SRF | Rating: Buy | CMP: Rs 2,825 | Stoploss: Rs 2,700 | Target: Rs 3,200 | Return: 13 percent
The stock has been rangebound for almost four months between Rs 3,100 and Rs 2,550 odd levels. Price action during this period has been positive as up move with long body candle. After the recent up move from lower levels stock is forming double bottom on daily chart.
Recent swing low of Rs 2,588 has taken support around 200-day moving average. Relative strength index and Stochastic have given positive crossover on with respective averages on weekly chart. Thus, stock can be bought at current levels and on dips to Rs 2,780 with stop loss below Rs 2,700 for target of Rs 3,200 levels.
HDFC | Rating: Buy | CMP: Rs 2,143 | Stoploss: Rs 2,080 | Target: Rs 2,330 | Return: 8 percent
The stock touched all-time high of Rs 2,358 in July this year and then corrected to Rs 1,951 levels. It has formed multiple lows around Rs 1,950 odd levels indicating as strong support. The recent bounce back from lower end of the range is suggesting stock is in the process of triple bottom formation on daily chart. The neckline or breakout level for the same is seen at 2195.
Relative strength index and Stochastic have given positive crossover on with respective averages on weekly chart. MACD line on daily chart has moved above equilibrium level of zero suggesting trend change. Thus, stock can be bought at current levels and on dips to Rs 2,125 with stop loss below Rs 2,080 for target of Rs 2,330 levels.
ICICI Securities | Rating: Buy | CMP: Rs 309 | Stoploss: Rs 292 | Target: Rs 360 | Return: 16 percent
Stock was in decline mode since its high of Rs 463 in April 2018 and touched low of Rs 188 in February this year. It has seen consolidation between Rs 285 and Rs 188 levels to form a base at lower levels. The stock witnessed breakout in late September to touch high of Rs 310 and then retraced back. It has again rallied back strongly in yesterday’s session indicating a resumption of the uptrend. Price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of trend in the direction of breakout on the daily and 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 weekly chart. Thus, stock can be bought at current levels and on dips to Rs 304 with stop loss below Rs 292 for a target of Rs 360 levels.
The author is Head of Technicals and Derivatives at Sanctum Wealth Management.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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