On February 12, Nifty saw a gap-up opening and after early gains, the index continued to trade in a range for the rest of the session. The Nifty closed at 12,201 up by 0.77 percent.
Broader market indices underperformed the benchmark with the S&P BSE Midcap and BSE Smallcap down by 0.29 percent and 0.13 percent, respectively, for the day.
The market breadth on the NSE was negative with the advance-decline ratio of 2:3. The Nifty has seen a strong bounce back from the Budget 2020 low of 11,614.
The congestion zone is placed at 12,272, but a close above this level could take the index towards 12,500 levels. On the downside, the immediate support is seen at 12,100 and then towards 11,990 levels.
In Nifty February monthly expiry options, maximum open interest for Put is seen at strike price 12,000 and 11,800; while for Call, maximum open interest is seen at 12,500 followed by 12,400.
Put writing was seen in the immediate strike price indicating supports are shifting higher. The Nifty options distribution is suggesting a range of 12,500-12,000 for the market.
India VIX closed at 13.15 down by 1.86 percent on Wednesday. VIX has come off its highs post Budget. Sustaining below 14 levels expect a further decline in VIX.
Here is a list of top five stocks which could give 10-18% returns in the next 1-3 months: Kotak Mahindra Bank: Buy| LTP: Rs 1714| Stop Loss: Rs 1,660| Target: Rs 1,880| Upside 10%
The stock is in an uptrend forming higher tops and high bottoms on the weekly chart. It touched a high of Rs 1,735 in December last year and then corrected down towards Rs 1,576 levels.
The stock took support around rising trend line connecting lows of Rs 1,002 and Rs 1,399 and then bounced back. On the daily chart, the stock has formed a bullish inverted head and shoulders pattern between 1729 and 1576 levels.
It is currently trading below the breakout level, but should eventually see a breakout on the upside after Wednesday’s rally.
The Relative Strength Index (RSI) and Stochastic have given a positive crossover with their respective averages on the daily as well as on the weekly chart.
MACD is turning up from the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,690 with a stop loss below Rs 1,660, and a target of Rs 1,880 levels.
Pfizer: Buy| LTP: Rs 4,462| Stop Loss: Rs 4,250| Target: Rs 5,100| Upside 14%
The stock after consolidating between 3850-2650 odd levels witnessed a breakout to hit an all-time high of 4499 in December last year.
Since then, the stock has been consolidating between 4490-3950 levels above the breakout level. Price momentum and volume action this week suggests that the stock is likely to see a breakout on the upside.
Price has given a breakout on the upside from Bollinger Band. MACD has given a positive crossover with its average above equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards 4375 with a stop loss below 4250, and a target of 5100 levels.
Mahanagar Gas: Buy| LTP: Rs 1,224| Stop Loss: Rs 1,160| Target: Rs 1,400| Upside 14%
The stock witnessed consolidation at lower levels between 1065 and 755 odd levels for almost one year. It has formed a bullish double-bottom reversal pattern on the weekly chart.
The stock has given a breakout from the pattern on strong momentum and high volumes indicating the start of a fresh uptrend.
For the last couple of weeks, the stock has been consolidating in the range of 1246-1143 post the breakout up move. After yesterday’s up move stock is suggesting a resumption of the uptrend.
Relative Strength Index has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 1,160 with a stop loss below Rs 1,160, and a target of Rs 1,400 levels.
Dabur India Ltd: Buy| LTP: Rs 519| Stop Loss: Rs 495| Target: Rs 600| Upside 15%
The stock has seen major consolidation between 490 and 360 odd levels over the 17-months period. It has formed a bullish W-shaped pattern on the weekly chart.
The stock has given a breakout from the pattern and hit an all-time high of 523 in Wednesday’s session. Price has given a breakout on the upside from Bollinger Band with the expansion of bands on the daily chart indicating a continuation of the trend in the direction of the breakout.
The relative strength index has given a positive crossover with its average on the daily chart. Thus, the stock can be bought at current levels and on dips towards 511 with a stop loss below 495, and a target of 600 levels.
Cholamandalam Investment and Finance: Buy| LTP: Rs 339| Stop Loss: Rs 320| Target: Rs 400| Upside 18%
For the last 21-months, the stock has been trading between 352 and 207 to form a base. The stock has been trending higher since its October’18 low of 207.
After the breakout above the congestion zone of Rs 335-310, the price has taken support at the neckline level. It has formed a bullish pole and pennant pattern on the daily chart which is a short term continuation pattern.
The Average Directional Index (ADX) line, an indicator of trend strength has moved above 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 Rs 333 with a stop loss below Rs 320, and a target of Rs 400 levels.
-by Ashish Chaturmohta, Head of Technical and Derivatives, Sanctum Wealth Management