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Podcast | Geopolitical tensions could keep bulls at bay; 3 stocks which could give up to 10% return

April 16
13:02 2018

Dinesh Rohira

With favourable industrial output (IIP) and inflation data (CPI), the Indian equity market witnessed a strong rebound for the third consecutive week with Nifty index closing above the crucial psychological level of 10,400.

Further, the index managed to retest 10,500 levels during the last trading session (Friday) although it failed to hold and closed at 10,480 levels with 1.44 percent gain on the weekly basis.

The sectorial index also indicated a positive trend on the weekly basis with Nifty IT, Bank Nifty and Metal index closing higher despite the geopolitical tension.

After witnessing a breakout from 10,450 levels on Thursday’s trade, the index formed a bullish candlestick pattern which consecutively ended with the formation of sustain bullish candlestick pattern on its weekly price chart.

The relative strength index or the RSI level on weekly chart stood at 55 which signalled a neutral stance with no divergence against the price.

However, a flattened weekly MACD signalled a likely positive crossover. Based on a Fibonacci retracement, a support for the index placed at 10,417 levels and resistance at 10561 levels.

With positive set of macro data, and better-expected earnings result, the index is likely to build uptrend momentum in coming session as it decisively indicated in the last week trade.

However, a geopolitical tension is expected to keep index volatile on a rangebound move although we maintain an upwards bias at 10,630 levels on weekly basis and at 10,390 on the downside.

Here is a list of top three stocks which can give up to 10% return in the short term:

Indiabulls Venture Ltd: BUY | Target Rs349 | Stop-loss Rs306 | Return 10%

Indiabulls Venture continued to trade on a positive trajectory on its long-term price chart despite a weak market sentiment.

Further, the scrip made a decisive breakout from its upper price band during the last trading session to create the next leg of the rally. It also witnessed a robust growth in volume front with about 4x time its average volume.

On the weekly price chart, the scrip made a strong bullish candlestick pattern indicating a positive signal coupled with a positive cue on MACD trend.

Further, RSI level at 67 has a strong support for the momentum with price trading above its upper band.

The scrip is currently holding resistance level at 383.3 on its pivot points and support level at 288. We have a BUY recommendation for Indiabulls Venture which is currently trading at Rs. 317.35

Vakrangee Ltd: SELL | Target Rs123 | Stop-loss Rs145 | Return 7%

Vakrangee continued to consolidate on its weekly and monthly price chart after making a decent rebound near 285 levels, but failed to hold the level and slipped below its crucial support level placed at 160-155 levels.

Further, a Bollinger band signalled a price hitting lower band which is a negative trend. The scrip formed a strong bearish candlestick pattern on its weekly price chart with price trading below all the crucial levels.

Further, the secondary momentum indicator continued to indicate negative signal with RSI at 34 levels coupled with weak support from MACD indicator.

The scrip is facing a resistance at 194 levels and strong support at 112 levels. We have a SELL recommendation for Vakrangee which is currently trading at Rs. 132.75

Deepak Fertilisers Ltd: BUY | Target Rs392 | Stop-loss Rs360 | Return 5%

Deepak Fertiliser witnessed a robust momentum during last week’s trading session after consolidating over three months from the earlier peak and made a strong rebound from 288 levels.

The scrip made a crucial breakout from its 200-days EMA level indicating a reversal trend in its price chart. Further, Bollinger bands indicated a price hitting upper band which is a positive signal.

After closing with about 9 percent gain on weekly basis, the scrip made a bullish reversal candlestick pattern on its weekly price chart. Further, a weekly RSI at 55 indicated a sustained buying regime coupled with positive cues on MACD.

The scrip is now facing a resistance at 402 levels and support level at 355 on pivot points. We have a BUY recommendation for Deepak Fertiliser which is currently trading at Rs. 373.50

Disclaimer: The author is Founder & CEO, 5nance.com. 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.

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