Nifty, after touching the record high of 12,103, has entered into a profit booking mode. The current price action of the index is showing flag formation in progress with the lower side of the flag around 11,800 and upper side around 12,100 marks. Since the formation is looking like a bullish flag, a decisive close above 12,100 will give a pattern breakout with a target of 12,500.
Aroon indicator up line is trading at 85, indicates strong positive movement in progress whereas ADX indicator has cooled off from higher levels of 40 to 35, indicating strong strength still intact as it is trading above 25 arks on the daily time frame. At the same time, RSI on weekly time frame took a reversal from 50 marks forming pullback buy pattern. It is currently trading around 63 level indicating the completion of correction sell leg and the beginning original trend.
India VIX is trading below strong support of 15 justifying slow and stable volatility movement ahead.
On the lower side, if the bullish pattern does not hold, key support levels are 5-week EMA placed around 11,760 and 20-DMA placed at 11,650. As long as the index is trading above 11,760, we maintain buy on the dip strategy whereas a close below 11,650 will push Nifty lower towards 11,400.
Bank Nifty
Unless it breaches crucial support of 20-DMA placed around 30,450, banking index should trade with strong positive sentiments whereas the range will be 30,450-31,500 for the coming week.
Here are the top stock trading ideas that can give good returns:
State Bank of India: Buy around Rs 335 |Target: Rs 390| Stop loss: Rs 305| Upside: 16 percent
After hitting high of Rs 363, SBI has corrected to Rs 336 where its key support is seen. It has sustained above all major moving average. RSI has started curling up after testing its oversold zone and daily MACD has given bullish crossover in negative territory. All these things support bullish bias in the stock.
Buy around Rs 335 with stop loss of Rs 305 for targets of Rs 390 levels.
Federal Bank: Buy around Rs 101 |Target: Rs 116| Stop loss: Rs 95| Upside: 15 percent
The stock has witnessed a decent correction from the peak of Rs 127 and is now taking support at the rising trend line. From last few days, it has been trading above its all significant moving averages, which indicates strength. Majority of indicators and oscillators are also looking firm lending support to price action.
With the chart looking attractive and decent volume participation witnessed, we recommend to buy around Rs 101 for an upside target of Rs 116, keep a stop loss of Rs 95.
Mahindra Lifespace Developers: Buy around Rs 410 |Target: Rs 470| Stop loss: Rs 375| Upside: 15 percent
The daily chart of Mahindra Life reveals that demand is increasing and supply is diminishing. Falling wedge breakout from lower levels is displaying trend reversal and creates buying opportunity at the current juncture. As of now, the stock has given breakout from its falling resistance line which augurs well for the Bulls and indicates surge on the upside.
Apart from this, positive crossover in MACD signals optimism, suggests upside move in the counter in coming sessions. Buy the stock around Rs 410 with a stop loss of Rs 375 for a target of Rs 470.
Thermax: Buy around Rs 1,025 |Target: Rs 1,150| Stop loss: Rs 958| Upside: 12 percent
The stock bottomed near Rs 873 and has been forming Inverted Head & Shoulder on the daily chart. The emergence of green candles above 200-DMA on the daily chart shows upswing. Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip around Rs 1,025 for the target of Rs 1,150 with a stop loss of Rs 958.
Infosys: Buy around Rs 730 |Target: Rs 770| Stop loss: Rs 703| Upside: 5 percent
Recently, Infosys gave channel breakout on upside that suggests trend reversal on the daily chart. From last few days, it has been trading above its all significant DMAs that indicates strength. Formation of bullish belt hold while giving trend line breakout indicates stock can upsurge further higher. Buy Infosys around Rs 730 with a stop loss of Rs 703 for a target of Rs 770.
The author is Head of Technical & Derivative 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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