Ashish Chaturmohta
After a tentative opening, the Nifty50 rally was led by Reliance Industries which helped the index close near the highs of the day. The Nifty ended at 9,187 levels up by 2.3 percent on Wednesday.
Broader market indices, the S&P BSE Midcap and Smallcap underperformed the benchmark indices with a gain of just 0.78 percent and 0.73 percent respectively for the day. The market breadth on the NSE was slightly in favor of advances.
The Nifty up move over the last month from low of 7,500 levels has formed a rising wedge pattern on the daily chart. The index needs to take out 9,400 levels on the upside for the Nifty to negate the pattern and trend higher towards 9,600-9,700 levels.
On the downside, 8,800 is the support level that needs to be broken for the confirmation of breakdown from the pattern. Then next support level is seen at 8,650 and 8,350 levels.
In Nifty April monthly expiry options, maximum open interest for Put is seen at strike price 9,000 followed by 8,000; while for Call maximum open interest is seen at 10,000 followed by 9,500 and 9,000.
Options data suggests that the 9,000 level is key to the level for the market. India VIX has seen correction from March high of 86.6 to the current level of 43. It needs to move below 40 levels for the market to sustain above 9,000 levels.
Here is a list of four stocks which could give over 15 percent return in the next 1-3 months:
Asian Paints Ltd: Buy | LTP: Rs 1,813 | Stop Loss: Rs 1,720 | Target: Rs 2,085 | Upside 15%
The stock is in a long-term uptrend forming a higher top and higher bottom on the monthly chart. After touching an all-time high of 1,616 in March this year, the stock corrected down towards the 1,500-1,450 zone.
Here, the previous breakout zone has not acted as a support and the stock has bounced back. The price has moved back above the short-term as well as long-term averages on the daily chart.
The stock has crossed the key Fibonacci retracement of 61.8% which is at 1,731. On Wednesday, the stock formed a long body bullish candle amid high volumes which indicates buying participation in the stock.
MACD has moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards 1,788 with a stop loss below 1,720 for a target of 2,085 levels.
Dr. Reddy's Laboratories Ltd: Buy | LTP: Rs 4,057 | Stop Loss: Rs 3,850 | Target: Rs 4,675 | Upside 15%
On the long-term monthly charts, the stock has formed a rounding bottoming out pattern over the four-year period. Volumes at lower levels have been high indicating accumulation in the stock.
The stock has seen a breakout on strong momentum and high volumes. The price has given a breakout on the upside from the Bollinger Band with the expansion of bands on the weekly chart which indicates a continuation of the trend in the direction of the breakout.
The stock has crossed the swing high of 3,690 and is now trading at a four and a half year high. The Average Directional Index (ADX) line, an indicator of trend strength has turned up from the equilibrium level of 20 with rising Plus Directional line on the daily chart.
Thus, the stock can be bought at current levels and on dips towards 3,990 with a stop loss below 3,850, and a target of 4,675 levels.
PI Industries Ltd: Buy | LTP: Rs 1,473 | Stop Loss: Rs 1,400 | Target: Rs 1,710 | Upside 16%
The stock touched an all-time high of 1,629 in February this year and declined to touch a low of 970. Here, the stock has taken support around the key Fibonacci retracement of 61.8% of the major rise from 676 to 1,629.
The stock has also taken support at a 100-week moving average and subsequently bounced back. It has crossed 61.8% (1,377) Fibonacci retracement of the decline 1,629-970 and has been consolidating above 1,377 levels for the last couple of weeks.
The stock has formed a bullish Pole and Flag continuation pattern on the daily chart and is now showing signs of a breakout on the upside.
MACD has moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards 1455 with a stop loss below 1400, and a target of 1710 levels.
Muthoot Finance Ltd: Buy | LTP: Rs 760| Stop Loss: Rs 720 | Target: Rs 880 | Upside 15%
The stock touched an all-time high of 955 in late February this year and then corrected to touch a low of 477. The price has taken support around its previous breakout zone and then bounced back.
The price has moved back above the short-term as well as the long-term averages on the daily chart. Recently, the stock has seen above-average volumes suggesting buying participation.
The stock has also crossed the resistance level of 750 and closed above it. The relative strength index has given a positive crossover with its average on the weekly chart.
MACD has moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards 745 with a stop loss below 720, and a target of 880 levels.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)
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