Nifty managed to close nearly 1 percent higher for the week ended December 28. The Nifty index witnessed a strong recovery from lower levels in the truncated week and reclaimed its 10,800 zones.
The index is now trading above its crucial short-term moving averages such as 5-days exponential moving average (EMA), 13-EMA, as well as 20-EMA.
The index was flirting with its 50-DEMA in the last 38 trading sessions and got stuck in a broader trading range with crucial hurdle at 10,950-10,985 zones.
“It formed a Hammer candle on a weekly scale which indicates that decline is being bought and requires a follow up buying interest to inch higher,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.
“Now, it has to continue to hold above 10,750-10,777 zones to extend its move towards crucial hurdle at 10,985 and above that, only a fresh leg of the rally could start while on the downside support exists at 10,777 then 10,650 zones,” he said.
However, most technical experts also suggest investors look at BankNifty charts because that can set the tone of the next leg of the rally.
“We witnessed ‘Bullish Engulfing’ as well as ‘Perfect Upward Bar Reversal’ patterns in Bank Nifty on the same day, that too precisely at 50% retracement of the recent up move and around the pullback zone of ‘Downward Sloping Trend Line’. That certainly set the tone for the next leg of the rally,” Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking told Moneycontrol.
“If Nifty has to extend this up move, the banking index is likely to be a charioteer of the same. In addition, the midcap index is positively poised as we can see a good ‘Higher Top Higher Bottom’ formation. We expect Nifty index to head towards 11050 – 11200 in the forthcoming week,” he said.
He further added that the ideal strategy for the coming week would be to keep a tab of mentioned levels and should concentrate more on the individual pockets within the midcap universe.
Here is a list of top 10 short-term trading ideas which could give 4-11% return in the next 1 month:
Analyst: Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking
Sun TV: Buy| LTP: Rs 614| Target: Rs 685| Stop Loss: Rs 583| Upside 11%
This recent laggard has been hovering around the weekly ‘200-days SMA’ since the last three months. In the week gone by, we saw a good buying emerging at lower levels and Friday’s massive bump-up resulted in surpassing the swing high of 607 quite convincingly.
This was supported by more than twice of its average daily volumes; providing credence to the move. We interpret this as a short-term trend reversal and thus, we recommend buying the stock for a positional target of Rs.685 in the coming days. The stop loss can be placed at Rs.583.
Escorts: Buy| LTP: Rs 701| Target: Rs 774| Stop Loss: Rs 689| Upside 10%
The second half of the current calendar year has not been so great for this counter. It has already retraced its multi-year rally by more than 50 percent and is now showing some signs of a revival.
At least with a near-term view, we expect some good moves in the stock. Recently, daily 89-days EMA acted as a sturdy wall; but looking at Friday’s move; we expect it to surpass in the forthcoming week.
Hence, one can look to go long in Escorts for a target of Rs.774 in the coming days. The stop loss can be placed at Rs.689.
Analyst: Dinesh Rohira, Founder & CEO, 5nance.com
Welspun Corp: Sell | LTP: Rs 139| Target: Rs 133 | Stop-loss: Rs. 148 | Downside: 4%
Welspun Corp continued to trade in negative trajectory during the entire week to slip below its crucial level of 200-days moving average placed at 140 odd levels, and thus witnessed a sustained selloff throughout the week.
Although, it made a decent rally after forming a low of Rs 125 odd levels toward a high of 186 levels on its six-month price chart, but it failed to continue with momentum to breach below crucial support at 115 levels.
Despite its attempt to reverse the trend in a couple of sessions, the scrip once again witnessed a selloff in the last four sessions which signaled a bearish sentiment.
It formed a solid bearish candlestick pattern on the weekly price chart coupled with small bearish on its daily chart.
Further, a weekly RSI stood at 48 odd levels indicating negative divergence, and MACD is likely to witness bearish crossover in the coming session to trade below its Signal-Line. We have a SELL recommendation for Welspun Corp which is currently trading at Rs. 139.05
DLF: Sell | LTP: Rs 177| Target: Rs. 170 | Stop-loss: Rs. 186 | Downside: 4%
DLF traded substantially under negative trajectory for five consecutive sessions after making a marginal rally in mid-December but failed to sustain the momentum to slip below its 200-days moving average placed at 187 levels in expiry session.
On its six-month price chart, the scrip has consolidated from a price-band of 220 odd levels towards lower support of 150 levels from where it made a strong rebound towards a high of 190 odd levels.
However, failing to sustain a momentum the scrip formed a bearish candlestick pattern with small lower tail on its weekly price chart coupled with the formation of a solid bearish pattern on daily chart.
The momentum indicator continued to outline weak trend with its weekly RSI at 46 level which signals downward divergence in price coupled with MACD trading below its Signal-Line on the weekly chart. We have a SELL recommendation for DLF Ltd. which is currently trading at Rs. 175.65.
Brokerage Firm: SMC Global Securities Ltd
Avenue Supermarts: Buy| LTP: Rs 1656| Target: Rs 1750| Stop Loss: Rs 1570| Return 6%
The stock made a 52-week low at Rs 1060.10 on 6th February 2018 and a 52-week high of Rs. 1698.70 on the 19th December 2018. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently placed at Rs 1421.03
After testing 100-week (EMA), the stock has regained its momentum and is continuously recording higher highs and higher lows on the weekly charts, which is bullish in nature.
Apart from this, the technical indicators such as RSI and MACD also suggest buying in the stock, so we can anticipate further buying at current levels. Therefore, one can buy in the range of 1620-1630 levels for the upside target of 1720-1750 levels and a stop loss below 1570.
Trent: Buy| LTP: Rs 359| Target: Rs 380| Stop Loss: Rs 340| Return 6%
The stock made a 52-week low at Rs 282 on 05th February 2018 and a 52-week high of Rs. 392.45 on 28th August 2018. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently placed at Rs 333.64.
The short-term, medium-term and long-term bias are positive for the stock as it is comfortably trading above its 200-days (EMA) and 100-weeks (EMA).
It formed a “Flag” pattern on the daily charts and has also given a breakout from the same by rallying over 4.5 percent on Friday. It has managed to close above the breakout level, so the follow-up buying can continue for coming days.
Therefore, one can buy the stock in the range of 354-357 levels for the upside target of 375-380 levels and a stop loss below 340.
Brokerage Firm: Karvy Stock Broking
Bajaj Finance: Buy Jan Future 2646| Target: Rs 2800| Stop Loss: Rs 2500| Upside 6%
Bajaj Finance managed to close with gains of nearly 1.92 percent, whereas Nifty Financial Services index closed with gains of 1.27 percent on a weekly closing basis exhibiting outperformance of the stock in comparison to the benchmark.
After placing a swing low of 2332 in the previous week, stock witnessed a gradual recovery in last few trading sessions. The stock price consolidated above its 21 & 50-days (EMA) which is currently placed near 2520 and 2463 respectively, while holding well above its long-term 200-DEMA (2286).
On the momentum setup, 14-period weekly RSI has witnessed positive crossover of its 9-period signal line above the equilibrium level, exhibits strength in the counter and momentum may accelerate further in sessions to come.
Prices managed to sustain above its middle Bollinger Band (20, 2) in the last couple of sessions. Hence we recommend Smart Traders to initiate a Long position on dips near 2620 levels for the higher target of 2800, keeping a stop loss below 2500 levels.
Glenmark Pharma: Buy Jan Fut Rs 701.65| Target: Rs 740| Stop Loss: Rs 660| Upside 5.5%
Glenmark Pharma has traded the week with a positive bias. The stock has closed with a positive return of more than 3% and outperformed its benchmark index Nifty Pharma which has closed with a marginally positive return of nearly 0.40 percent during the last week.
Adding to that, the stock is trading well above its major moving averages on daily charts with positive price structure, indicating positive momentum in the stock is likely to continue in the coming trading sessions as well.
On oscillator front, the 14 period RSI has given positive crossover with the 9-day signal line and poised with a bullish bias, indicating that stock is likely to continue its outperformance in the coming trading sessions as well.
The Parabolic SAR (Stop & Reverse) on the daily chart is trading below the price which reflects, buying will remain intact in the counter in the coming trading sessions. From the above observation of price momentum, it seems the stock is likely to trade with positive bias in the coming trading sessions also.
Therefore, we recommend Smart Traders to initiate a Long position in the counter around 690 levels with a stop loss placed below 660 for the higher target of 740 levels.
Amara Raja Batteries: Sell Jan Fut Rs 740| Target: Rs 693| Stop Loss: Rs 785| Downside 6%
Amara Raja Batteries witnessed sell-off after a technical pullback in the earlier week. The stock price lost almost 1.15 percent, whereas benchmark index Nifty has lost nearly 1.16 percent on a weekly closing basis, moving in line with underlying weakness in the index.
After placing a swing low of 683, stock made technical pullback towards 758 levels, where it found resistance, and from last few sessions, stock price was trading with a weak bias and also holding below its major 200-DEMA (776) of the stock, also it is hovering near its 21 & 50-DEMA which is currently placed near 741 & 733 levels respectively.
On the momentum setup, 14-period RSI consolidated below 60-level and currently tilted southward with a crossover of its 9-period signal line, which reaffirms the fact that momentum is fading away in the counter.
Technical chart indicates stock price may decline further in the sessions to come. Hence, we recommend Smart Traders to initiate a short position on bounce near 748 levels for the lower target of 693, keeping a stop loss above 785 levels.
Bajaj Auto: Sell Jan Fut Rs 2737.55| Target: Rs 2600| Stop Loss: Rs 2900| Downside 5%
Bajaj Auto has closed the week with a negative return of more than 3 percent and underperformed its benchmark index Nifty Auto which has closed the week with a negative return of nearly 1 percent.
Technically, the stock is trading below its 21/50/100/200 DEMA on the daily chart, exhibiting underlying weakness in the stock.
On the technical indicator front, the 14-period RSI is trading below its 9-day signal line and poised with weak bias, indicating downtrend in the counter in the near-term.
The Parabolic SAR (Stop & Reverse) on the daily chart is trading above the price, indicating weakness is likely to continue in the stock.
The derivatives data suggests that the stock has witnessed the addition of short positions during the last trading session, reconfirming our bearish view.
From the above observation of price momentum, it seems the stock is likely to trade with negative bias in the coming trading sessions also.
Therefore, we recommend Smart Traders to initiate a short position in the counter around 2,780 levels with a stop loss placed above 2,900 levels for the lower target of 2,600 levels.