The Nifty declined on September 18 but managed to give a third consecutive higher weekly closing. The benchmark index is trading above 5-simple moving average on a daily, weekly, and monthly time frame, indicating positive price action is unharmed.
The weekly MACD line is trading above the signal line, indicating that positive momentum will continue. At the same time, MACD is trading above the '0' line, which is also supportive of positive price movement in the mid-term.
Currently, the index is progressing through an Inverse Head and Shoulders pattern, and a bullish breakout will come on a decisive close above 11,600, whereby Nifty can move towards 12,000 to complete its pattern target.
India VIX is trading below its 10-DMA as well as 20-DMA, suggesting volatility is not in the favour of bearish action. At the same time, 11,200 will act as a crucial support and base. Any decisive close below these levels will lead to a trend reversal, till then one can opt for the buy-on-dip strategy for higher levels of 12,000.
Bank Nifty
The Bank Nifty traded with a negative tone but managed to sustain above the crucial 22,000-mark. As long as the banking index trades above 22,000, it can be a bargain-hunting opportunity for the bulls.
Here are three stocks that can give up to 20 percent return:
Bank of Baroda: Buy around Rs 45 | Target: Rs 54 | Stop Loss: Rs 40 | Upside: 20 percent
The short-term correction seems to be over in the stock and the bulls are likely to take charge again. The higher high and higher low formations on the weekly timeframe suggest that the bulls have entered in a counter at lower levels. Further, the line of parity on the daily chart is providing good support, which signals that a short-term rally can't be ruled out in the coming days. Traders can initiate long positions around Rs 45 with a stop loss of Rs 40 for the target of Rs 54.
State Bank of India: Buy around Rs 190 | Target: Rs 215 | Stop Loss: Rs 178 | Upside: 13 percent
Bargain hunting is seen at lower levels where it formed a strong base near Rs 185-190 levels. Currently, it has given a consolidation range breakout on the daily chart in which it has been trading for the last few days and the momentum oscillator RSI also turned above 50-mark, which suggests that a reversal is round the corner.
Other indicators and oscillators are also lending support to the price action. Traders can take an entry from the level of Rs 190 for the target of Rs 215 while keeping a stop loss of Rs 178.
Mahanagar Gas: Buy around Rs 900 | Target: Rs 960 | Stop Loss: Rs 870 | Upside: 6 percent
The scrip spurted from a low of Rs 876 and formed a Cup and Handle pattern on daily chart. It showed pullback on the upside marked the high of Rs 919 whereby pattern breakout will come on a decisive close above Rs 950 levels.
Indicators and oscillators are also sending conducive signals for the coming sessions. Based on the technical structure, one can go long in the scrip around Rs 900 for the target of Rs 960 keeping a stop loss of Rs 870 on a closing basis.
(The author is Head of Technical Research at Narnolia Financial Advisors Ltd.)
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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