Podcast | These 3 short-term stock ideas may deliver up to 10% return
The Nifty traded on a firm note for most part of Tuesday but ended with a mild loss of 0.04 percent. Selling pressure during the last hour of trade dragged the index lower as uncertainty with respect to the formation of government in Karnataka loomed. After a positive start, Nifty slowly shed its morning gains and fell from the day’s high, finally closing at 10,801.85.
The Relative Strength Index (RSI) on the daily chart is placed at 66.94, which is showing an upward momentum. Moving average convergence divergence (MACD) is trading above the zero line, with a positive crossover. This indicates that the bias could remain bullish over the next few trading sessions.
India VIX fell 7.58 percent to 13.16. A decline in VIX suggests limited downside and a consolidated upmove in the market.
The weekly chart still shows an uptrend. This indicates that the Nifty has the potential to move higher. The index is expected to face resistance around 10,900 levels. If it manages to close above the psychological levels of 10,900, then the next levels to watch out for will be 11,072 (upper band of Bollinger) and 11,171 (its life-time high).
The supports are gradually shifting higher at 10,685 (5-day Double Exponential Moving Average) and then towards 10,560 levels (50 percent retracement of the January to March downfall).
The base of the market is also moving upwards which suggests the bulls are holding a tight grip on the market for the next few trading sessions.
On the options front, maximum Call open interest of 64.15 lakh contracts is seen at 11,000 strike price, followed by 10,800 with 36.88 lakh contracts. Maximum Put open interest of 64.19 lakh contracts is seen at 10,500 strike price, followed by 10,700 with 46.87 lakh contracts.
As per the options data, the support level for the Nifty has shifted higher in May expiry compared to last week and immediate support is seen around 10,700 levels, whereas 11,000 will act as a major hurdle.
Here is a list of top three stocks that could deliver nearly 10 percent return:
Bharat Petroleum Corporation Ltd: Buy | Close: 405.80 | Target: Rs 438| Stop loss: Rs 387 | Return: 8.15%
After making a marginal consolidation, the stock has given a breakout above Rs 400-403 levels on Monday with moderate volumes. The daily Relative strength index (RSI) is making the higher bottom and higher top and MACD is trading with a positive crossover whereas (+) DI trading above (-) DI, which indicates that the stock has the potential to move higher.
Positional traders can buy the stock on dips at around Rs 400-403 with a stop loss below Rs 387 (closing) for the target of Rs 438.
NMDC: Sell | Close: 115.05 | Target: Rs 107 | Stop loss: Rs 124 | Return: 9.32%
On daily charts, the stock price is trading below its head and shoulders neckline of Rs. 115-116 levels with moderate volumes. The Daily Relative Strength Index (RSI) is showing a downward momentum and the MACD is trading below zero line with negative cross whereas (-) DI continuously trading above (+) DI from last eight trading days.
Based on the above observations the stock is likely to move down in the near term. Traders can sell the stock after some technical bounce-back around Rs. 118-120 with a stop loss above Rs 124 (closing basis) for the target of Rs 107.
Housing Development Finance Corporation Ltd: BUY | Target: Rs 2,040 | Stop loss: Rs 1,880 | Return: 5.97%
On the weekly charts, the stock is trading with positive momentum with moderate volumes. Weekly indicators, Relative strength index (RSI) and MACD are in buying mode whereas the OBV—On Balance, Volume is showing upward momentum, which indicates strong buying interest for short to mid-term.
Positional traders can buy the stock on dips at around Rs. 1,920-1,925 levels with a stop loss below Rs 1,880 (closing basis) for a target of Rs 2,040.
Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts 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.