Nifty after hitting a record high of 11,856.15 settled with highest weekly close around 11,750. However, on the daily chart, Nifty has formed a bearish candlestick pattern ‘Marubozu’ that indicates trend reversal but that would be confirmed if the market closes in the red on April 22.
Recovery in the market in the next 1-2 trading session would negate the bearish implication, and higher high, higher low formation would continue.
The occurrence of negative divergence in RSI on daily time frame is also indicating cautiousness on higher side and signals some retracement ahead. At the same time, Nifty faced resistance from resistance 2(R2) of monthly pivot points standing around 11,860, suggesting presence of selling pressure around those levels.
Nifty is also trading above its two major simple moving averages 100-DMA and 200-DMA that are rising and placed around 11,000. The crossover between them hints at strong uptrend in mid-term.
Nifty's very short term support is at 11,626 where rising 5-Week SMA is placed. Major support for Nifty is around 11,540 where line of polarity is placed. Moreover, the indication from candlestick patterns suggests new trading range will be only above 11,860 or below 11,626.
Bank Nifty after making a new high of 30,669 has formed bearish engulfing candlestick pattern indicating selling pressure near life high. Immediate trading range for Bank Nifty is 30,600-29,700.
Here are five stocks that could return 7-14 percent:
Star Cement: Buy Around Rs 105 | Target: Rs 120 | Stop loss: Rs 97 | Upside: 14 percent
On the weekly chart, scrip has turned north after the formation of the inverted H&S pattern suggesting bullishness building up in the stock. Moreover, the stock is trading above its 200-DMA showing its firmness.
Formation of a bull candle near baseline indicates a short covering rally in the offing. MACD is also showing positive crossover on weekly chart favouring the bulls. The stock may be bought around Rs 105 for the target of Rs 120, keeping a stop loss of Rs 97.
Gruh Finance: Buy Around Rs 285 | Target: Rs 322 | Stop loss: Rs 260 | Upside: 13 percent
For the last three weeks, the stock has seen a major consolidation between Rs 290 and Rs 275. On the daily chart, it formed a cup & handle pattern over three to four months pattern and expected a breakout in the coming sessions.
Weekly MACD has given a positive crossover below central line suggesting breakout is around the corner. Looking at these technical factors, we suggest buying in the scrip around Rs 285 with a stop loss below Rs 260 on a closing basis for the target of Rs 322.
Minda Industries: Buy Around Rs 380 | Target: Rs 425 | Stop loss: Rs 350 | Upside: 12 percent
On the daily chart, Minda has given inverted H&S breakout from its neckline. A sustained trade beyond the neckline will trigger a breakout resuming the uptrend in the stock. Moreover, it has been trading above its 200-DMA for quiet long affirming bullishness in the stock.
Furthermore, RSI has formed a positive reversal indicating higher levels in the coming trading sessions. A trader can buy the stock around Rs 380 with a stop loss of Rs 350 for the target of Rs 425.
JSW Steel: Buy Around Rs 296 | Target: Rs 318 | Stop loss: Rs 283 | Upside: 7 percent
The stock seems to have bottomed near Rs 275-280 and has been consolidating for the last few days on the daily chart. The green candles near the support line 100-DMA indicate upside movement in the coming sessions.
Sustainability of RSI above 50 on the daily chart adds the conviction of buying the stock around Rs 296 for the target of Rs 318 with a stop loss of Rs 283.
Nucleus Software Exports: Buy Around Rs 375 | Target: Rs 399 | Stop loss: Rs 360 | Upside: 7 percent
On the weekly chart, Nucleus software has broken out from a double bottom pattern around Rs 368 suggesting upside direction. Further, this breakout is accompanied by healthy volume confirming the authenticity of the breakout.
RSI turned north after taking support at the oversold level suggesting that there are more legs to this rally following the bullish breakout. One can take long position in the stock around Rs 375 with a stop loss of Rs 360 for the target of Rs 399.
The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.
Disclaimer: The views and investment tips expressed by investment expert 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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