Shabbir Kayyumi
Nifty spikes gave second consecutive higher weekly closing and managed to close above the previous three weeks high placed around 9141, indicating the persistence of ongoing positive trends. Moreover, the index is trading above 5-Daily SMA and 5-Week SMA placed around 8800 marks, indicates upside move will continue in the near-term towards three monthly SMA which is standing around 9700 marks.
Recently, the index has given a breakout of the inverse head and shoulders classical technical pattern on a lower time frame by giving a decisive close above 9,000 levels and target as per the pattern come to 9,700-mark.
Furthermore, the Benchmark index is trading above 20-DMA which is footed at 8,600 suggests one should opt for buy on dip strategy going forward. On a reverse side, a decisive close below the crucial support of 8600 can push index towards the line of parity standing around 8200 marks.
Banking Index has given moving average crossover of 5 SMA and 20 SMA indicating bullish momentum in the short term. Also, Bank Nifty has given closing above 5 week SMA for the first time almost after two months suggesting strength. Conversely, any decisive trading below 19500 will be a sign of weakness.
Below are the top 3 stocks which can return 11-23 percent:
DLF: Buy around Rs 130 | Target: Rs 160 | Stop loss: Rs 115 | Upside: 23%
The scrip has formed a cup and handle on the daily charts and is undergoing consolidation in the longer time frame. It is on the verge of resuming its prior trend. The momentum indicator MACD has crossed the signal line indicating a start of a trend. The RSI too is above its key 40 marks indicating positive momentum on its side.
We recommend a buy in DLF around Rs 130 keeping a stop loss of Rs 115, for the target of Rs 160
Tata Steel: Buy around Rs 286 | Target: Rs 330 | Stop loss: Rs 270 | Upside: 15%
The stock witnessed sustained sell-off over the past few days, however, the strong demand zone around Rs 285-290 levels, has emerged as the support for the same. On the weekly chart, the line of polarity suggests strong base and until this break decisively.
Formation of an inverted Head and Shoulder on the daily chart indicates the consistency of positive rhythm in the stock. We expect the stock to perform going ahead and recommend buying in stock around Rs 286 with stop loss of Rs 270 for the target of Rs 330.
State Bank of India: Buy around: Rs 190 | Target: Rs 212 | Stop loss: Rs 178 | Upside: 11%
Daily chart of stock reveals that demand is increasing and supply is diminishing as stock is taking support from line of parity showing a rebound from its lower levels. Prices have been trading above the consolidation for the last few days showing strength from the bottom.
With the chart looking attractive and decent volume participation witnessed, we recommend a buy around Rs 190 in this stock for an upside target of Rs 212, keep a stop loss of Rs 178.
The author is Head of Technical Research at Narnolia Financial Advisors Ltd.
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.
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