Nifty#39;s immediate support at 11,394; Mahindra CIE among top 5 stocks which can give up to 20% return
Sanctum Wealth Management
After last week’s minor bounce back in the latter part of the week, trade war tensions and weakness in the rupee continued to put pressure on the market. The Nifty closed lower by 1.3 percent on September 10 at 11,438 level. Market breadth was 2:1 in favour of declines on NSE.
Broader market benchmark BSE Midcap and Smallcap lost 1.68 percent and 1.07 percent respectively. Nifty formed long bearish belt hold line i.e. opening and high price were the same. After the last two sessions of higher highs and higher lows formation, the index saw a reversal. Also, on the daily chart it has now formed a lower top.
Last week’s low of 11,394 is the immediate support breaking below which decline will continue towards 11,250-11,200 which is the Nifty breakout level. On the upside, the index needs to take out 11,600 for strength to be seen towards 11,760 level.
On Nifty options, maximum open interest for Puts is at 11,400 followed by 11,500 indicating good support zone for the market. For Calls, it is at 11,800. A significant amount of Call writing was seen in strike price between 11,500 to 11,800 suggesting upside is likely capped and unwinding in Puts from 11,700 to 11,400, pointing to a downside in the near term.
India VIX, a measure of volatility, saw a spike of 9.43 percent on September 10 to close at 15.20 level. It has seen fresh breakout which is going to likely to add pressure on the market.
Here are the top stock trading ideas which can give good returns in the near term:
Persistent Systems | Buy | CMP: Rs 885 | Stop loss: Rs 840 | Target: Rs 1,000 | Return: 13%
On the long-term monthly charts, the stock is seeing major rounding bottom formation over a period of more than three years now. It touched an all-time high of Rs 960 on January 2015 and then declined to touch low of Rs 559 on April 2017. Since then, the stock witnessed good volumes indicating buying interest during the up move.
For the last six months, the stock has been facing resistance around Rs 875 odd levels and it is now showing signs of breakout on the upside. MACD line has given positive crossover with its average and moved above the equilibrium level of zero on the daily chart.
It has seen a strong rally with volumes in the last three sessions from 100-day moving average. Thus, the stock can be bought at the current level and on dips to Rs 874 with a stop loss below Rs 840 for a target of Rs 1,000.
Mahindra CIE Automotive | Buy | CMP: Rs 299 | Stop loss: Rs 285 | Target: Rs 340-360 | Return: 20%
The stock hit a high of Rs 314 in August 2018 and then declined down to Rs 156 in the same month. Since then, the price has seen and formed major base over a 3-year period. It had been facing resistance around Rs 260-270 level which it crossed last week. The price momentum and volumes were high on the breakout indicating buying participation in the stock.
Its price has given breakout from Bollinger band with the expansion of band and closed above upper band suggesting a continuation of the trend in the direction of breakout on daily as well as on weekly chart. Momentum indicators are in bullish mode on the daily chart. Thus, the stock can be bought at the current level and on dips to Rs 293 with a stop loss below Rs 285 for a target of Rs 340-360.
Cipla | Buy | CMP: Rs 668 | Stop loss: Rs 635 | Target: Rs 750 | Return: 12%
The stock has been consolidating between Rs 660 and Rs 460 odd levels for last twenty months. It has formed higher lows indicating buying at higher levels on declines. It has formed a strong base and it is now trading above its breakout level.
The stock has seen above average volumes in the last five months indicating accumulation at lower levels. Momentum indicators are in bullish mode on daily as well as weekly charts. Thus, the stock can be bought at current level and on dips to Rs 660 with a stop loss below Rs 635 for a target of Rs 750.
HCL Technologies | Buy | CMP: Rs 1,089 | Stop loss: Rs 1,050 | Target: Rs 1200 | Return: 10%
The stock has seen major long-term consolidation between Rs 1060 and Rs 700 odd levels for more than three years on monthly charts. In the last five months, it has seen strong U-shaped recovery after hitting high of Rs 1108 levels in April. The price has given breakout from Bollinger band with the expansion of band and closed above upper band suggesting a continuation of the trend in the direction of breakout on the weekly chart. ADX line indicator of trend strength has moved above the equilibrium level of 20 on the weekly chart.
Thus, the stock can be bought at current level and on dips to Rs 1,075 with a stop loss below Rs 1,050 for a target of Rs 1,200.
Manappuram Finance | Sell | CMP: Rs 91 | Stop loss: Rs 96 | Target: Rs 81 | Return: 12%
The stock has formed a bearish double top pattern on the weekly chart between Rs 130 and Rs 95 odd levels. It has given breakout on the downside with a long bearish candlestick and high volumes indicating selling in the stock. It has given breakout from Bollinger band with the expansion of band and closed below lower band suggesting a continuation of the trend in the direction of breakout on daily chart.
The stock is trading below its short-term as well as long-term averages. ADX line indicator of trend strength has turned up from an equilibrium level of 20 showing weakness in the stock. Thus, stock can be sold at current level and on rise to Rs 93 with stop loss above Rs 96 for target of Rs 81.
Disclaimer: The author is Head Technical And Derivatives at Sanctum Wealth Management. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.