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A break below 11,000 could lead to 200-point dip on Nifty; Dabur India, Asian Paints top buys

A break below 11,000 on Nifty can see a decline towards 10,770 and 10,630 odd levels. On the upside, 11,537 and then 11,614 will act as resistance

March 05, 2020 / 09:02 AM IST
 
 
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Ashish Chaturmohta

Though domestic equity markets opened in the green, they immediately turned negative on March 4. The market extended losses in afternoon trade as an increase in coronavirus cases in India led to a sell-off that pushed Nifty below 11,100 in intraday trade.

However, a bounce back in the last hour of trade helped cut losses. Nifty50 closed the day at 11,251 level down by 0.46 percent on March 4.

The broader market indices, BSE Midcap and Smallcap, underperformed the benchmark indices with both losing 1.61 percent each for the day.

Nifty has seen major intraday swings in the last few days. Thus, forming a broader range of 11,450 and 11,000-odd levels which needs to be broken for the market to see a directional move.

Currently, the index is managing to hold above 11,000 where rising support trend line connecting the lows of 10,004 and 10,670 is seen on the weekly chart.

A break below 11,000 on the Nifty50 index can see a decline towards 10,770 and 10,630 odd levels. On the upside, last week’s falling gap high of 11,537 and then 11,614 will act as resistance for the market.

Here is a list of top four trading ideas which could give 11-16% return in the next 1-3 months:

Dabur India: Buy| LTP: Rs 514| Stop Loss: Rs 488| Target: Rs 600| Upside 16%

The stock has seen major consolidation between 490 and 360 odd levels over the 17-month period and formed a base for the next leg of the rally.

It has formed a bullish W-shaped pattern on the weekly chart and witnessed a breakout early last month. Since then the stock has been consolidating above the breakout level for the last few weeks.

Volumes have been above average for the last couple of weeks around all-time high levels during the consolidation indicating buying participation even at higher levels.

The recent price correction has taken support at its 21-Day exponential moving average (EMA) and then bounced back.

The Relative Strength Index (RSI) and Stochastic have given positive crossover with their respective averages on the daily chart.

Thus, the stock can be bought at current levels and on dips towards Rs 506 with a stop loss below Rs 488, and a target of Rs 600 levels.

Asian Paints: Buy| LTP: Rs 1849| Stop Loss: Rs 1780| Target: Rs 2050| Upside 11%

The stock is in a long-term uptrend forming higher tops and higher bottom formations on the weekly chart. After touching an all-time high of 1916, the stock has corrected down towards Rs 1,767 levels.

Here, the price has taken support near its 89-Day exponential moving average (EMA) and then bounce back. On Wednesday, the stock formed a long body bullish candle with high volumes indicating buying participation.

The Relative Strength Index has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1825 with a stop loss below Rs 1780, and a target of Rs 2050 levels.

PI Industries: Buy| LTP: Rs 1576| Stop Loss: Rs 1500| Target: Rs 1800| Upside 14%

The stock is in a long-term uptrend forming higher tops and higher bottom formation on the weekly chart since October’18 low of Rs 675. The stock touched an all-time high of Rs 1629 three weeks ago and then it underwent a correction.

The price has taken support at its 89-Day exponential moving average and bounced back after forming a bullish hammer candlestick pattern on the daily chart.

Also, the price has moved back above its short-term 21-Day exponential moving average which has been acting as support on dips. In the last couple of months, the stock has witnessed above average volumes indicating buying participation.

The Relative strength index (RSI) has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips to Rs 1,545 with a stop loss below Rs 1500, and a target of Rs 1,800 levels.

CESC: Sell| LTP: Rs 610| Stop Loss: Rs 640| Target: Rs 520| Downside 14%

The stock has seen major consolidation between Rs 850 and Rs 620 odd levels for almost two years. The stock has given a fresh breakdown from the consolidation and touched 3 year low.

Volumes have been higher on breakdown indicating selling pressure in the stock. Price has given breakout on the downside from Bollinger Band with the expansion of bands on the daily and weekly chart indicating a continuation of the trend in the direction of the breakout.

Thus, the stock can be sold at current levels and on the rise towards Rs 620 with a stop loss above Rs 640, and a target of Rs 520 levels.

(The author is Head of Technical and Derivatives, Sanctum Wealth Management)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Moneycontrol Contributor
Moneycontrol Contributor
first published: Mar 5, 2020 09:02 am

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