The Nifty recovered 100 points from Monday’s low and finally closed the day with the gains of 19 points to close at 10,912 levels. In the last two sessions, Nifty has formed a double bottom at 10,912 odd levels.
Nifty has formed a bullish rounding bottom on the intraday hourly charts. The primary trend of the Nifty is still positive with the index currently trading above its 5, 20 and 200-days simple moving average (SMA).
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Last Friday, when the government presented its Interim Budget, Nifty made an intraday top at 10,983. This was the third time when Nifty took resistance around 10,980-10,988 range.
On Dec 19, 2018, Nifty made a top at 10,985 and on Jan 21, 2019, Nifty made a top at 10,987. There is a triple top formation on the Nifty daily charts and any level above 10,988 resistances would be considered as a breakout from the consolidation pattern.
However, the Nifty Midcap and Smallcap 100 indices continued their underperformance by falling 0.9 percent and 1.55 percent, respectively. On YTD basis also, both the indices are down 6 percent each as against 0.50 percent gain in the Nifty.
On the Derivatives front as well, we have seen long positions being built in Nifty and Bank Nifty Futures’ during the first two days of the February series.
Foreign institutional investors (FIIs) created fresh longs in both — Index and Stock Futures’ segment on Friday. Amongst the Options, Put writing was seen around 10700-10800 levels.
Moreover, 10700 is the level which consists of highest Open Interest (OI) amongst the Nifty February Put options. Considering the technical and derivative evidence discussed above, we believe that the short-term trend in the Nifty is still bullish and one should remain optimistic about the market for the coming days.
Therefore, our advice would be to go long in Nifty with a stop loss of 10,700 levels and a target of 11,200 and 11,350 levels.
Here is a list of top three stocks which could give 7-10% return in the next 1 month:
RIL: Buy| LTP: Rs 1290| Target: Rs. 1385| Stop-Loss Rs 1230| Return 7%
Reliance Industries has given a breakout on the daily chart on Monday by closing above the resistance level of Rs 1265. The primary trend of the Reliance is bullish as the stock price is trading above its 200-day SMA since January 2017.
The momentum indicators and Oscillators like RSI and MACD are showing strength on the daily charts. RIL is trading just 3 percent off from the all-time high of 1329 which it touched in August last year and the technical indicators are pointing that the stock is likely to cross that high in the days to come.
Therefore, we recommend investors to buy Reliance Industries at the current market price of Rs 1290 and average at 1260 for the target of 1385. Investors can keep a stop loss below Rs 1230.
Kotak Mahindra Bank: Buy| LTP: Rs 1272| Target: Rs 1370| Stop-Loss: Rs 1220| Return 8%
The primary trend of the Kotak Mahindra Bank is bullish with higher tops and higher bottom formation on the daily chart. The stock price is trading above its 5, 20 and 200-day SMA indicating bullish trend for the short to medium-term.
Oscillators and momentum indicators are also showing strength in the stock. Private sector banks are doing well and look good on the charts for the short term.
Therefore, we recommend investors to buy Kotak Mahindra Bank for the target of 1370 and keep a stop loss below Rs 1220
Jubilant FoodWorks: Buy| LTP: Rs 1,396| Target: Rs 1,535 | Stop-Loss: Rs 1,300| Return 10%
Jubilant FoodWorks has broken out on the daily chart on Monday by closing above the resistance level of 1370 levels to close at a five-month high.
During the last week, the stock price has also broken out above the downward sloping trendline, adjoining the high of 28-August and 21-December.
The stock price is trading above its 5, 20 and 200-day SMA indicating bullish trend for the short to medium-term. Oscillators and the momentum indicators are also showing strength in the stock.
Therefore, investors are recommended to buy Jubilant FoodWorks for the target of 1535, and keep a stop loss at Rs 1300
(The author is Senior Technical & Derivatives Analyst, HDFC Securities)
Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Feb 5, 2019 08:44 am