After rallying for six weeks in a row the Nifty breathed a sigh of relief. And set a small bearish candle on a weekly basis. During the week, however, the Nifty index hit recovery of 78.6 percent of the overall fall. Keeping it at 11,350 levels.
The Nifty index has major support for the 200-DMA, which is kept at 10,870 levels. As long as the Nifty trades above 10,870 levels. We can expect some consolidation and cannot even rule out pulling towards 11,200 levels.
We expect a good start on Monday with some rangebound trading. The momentum indicator at 62 turns off the RSI 72 overbought territory and takes care of the bulls.
The volatility index India VIX is below 25 levels from the last two weeks, indicating no major movements in the short term.
Weekly Options data indicates that the maximum public interest towards the putt has been kept at 11,000 on strike, which has an open interest of 20.6 lakh contracts and is likely to serve as a major support in the coming week.
A huge amount of call writing was seen at 11,200 strikes, which had maximum public interest, followed by 11,400 strikes. Therefore, the overall pick data indicates some rangebound movement in the coming week and the Nifty may trade in the narrow range of 11,000 – 11,200.
Bank Nifty forms the bearish engulfing candlestick pattern on a weekly scale. The Bank Nifty Index has established a double top model and is also trading in a rising channel. The upper end of the rising channel was placed at 23,200 levels. This serves as a major barrier and as long as it trades below, we can expect some consolidation with negative bias. Immediate support will be kept at 21,000.
Here are three stocks which can return 11-12 percent in the short-term:
Aarti Industries: Buy | Target: Rs 1,100 | Stop loss: Rs 930 | Return: 11 percent
The stock provided a breakout from the double bottom pattern on the daily chart and gained support at its long-term 200-DMA, which is currently at the Rs 900 level. The short-term goals for its double bottom model are approximately 1,100 levels. It is also trading above the short-term 21-DMA of Rs 930, which acts as immediate support. The momentum indicator and oscillator are in buy mode on the daily chart, indicating a more positive momentum over the counter.
Cipla: Buy | Target: Rs 800 | Stop Loss: Rs 680 | Return: 11 percent
The stock has provided a breakout since the two-month consolidation and is currently nearing its all-time high levels. It is trading well above its short-term and long-term moving average. The MACD provided a buying crossover and the momentum indicator RSI provided a breakout from. Its falling channel on the daily chart, indicating that the stock will continue its northward movement in the short term.
Grasim Industries: Buy | Target: Rs 710 | Stop Loss: Rs 590 | Return: 12 percent
This stock forms a double bottom model and it is on the verge of a big breakout from it. The momentum index RSI has reversed from its best-selling territory. currently at 60 levels and the MACD has provided a buy crossover on the daily chart. Based on the above rationality. We believe that the stock is likely to break out in the coming week and reach the level of Rs 710.
Author Nilesh Ramesh Jain, Derivative and Technical Analyst at Anand Rathi Shares and Stock Brokers.
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