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#39;Short-term technical set up remains bullish, 10,985 crucial for further Nifty upside#39;

February 11
10:28 2019

Shabbir Kayyumi

Nifty started the week with a bullish note and gained almost 300 points till February 7, however, some profit booking took place after RBI policy meet outcome. Nifty has faced resistance at the key Fibonacci retracement level of 61.8 percent for the prior large fall. But short-term technical set up remains bullish.

Recently, the index has got a fresh buy signal in GMMA (Guppy Multiple Moving Average) on daily timeframe indicating bullish bias. It is already in buy mode on weekly and monthly time frames. Higher high and higher low formation on weekly as well as monthly time frames suggest Nifty is trading with positive bias in the higher time frame.

Volatility index VIX has closed below 16. The market is trading above its three major simple moving averages 20-DMA, 50-DMA and 200-DMA that are placed between 10,840-10,860, suggesting strong support zone on the lower side. A normal retracement towards this strong support zone of moving averages can be used as a buying opportunity.

Moreover, any decisive move above the stiff resistance 10,985 will push it higher towards previous swing high (11,111). A close below the strong support line of polarity around 10,850 can change the current sentiment.

In case of Bank Nifty, range breakout is expected only above 27,585, which will push prices higher towards 27,900. The immediate trading range of 27,900-26,900 remains intact.

Here is the list of five stocks that could return 5-15 percent in short term:

Century Plyboards | Buy around: Rs 165 | Target: Rs 190 | Stop loss: Rs 149 | Upside: 15 percent

The daily chart of Century Plyboards reveals that demand is increasing and supply is diminishing. Emerging double bottom on the weekly chart shows the stock has bottomed out near it lower levels.

Moreover, a bullish crossover is seen in the scrip where 20-DMA has crossed 50-DMA suggesting upside momentums. Positive crossover in MACD is also favouring price action. Buy Century Plyboards around Rs 165 with the stop loss of Rs 149 for the target of Rs 190.

Maruti Suzuki India | Buy around: Rs 7,100 | Target: Rs 8,100 | Stop loss: Rs 6,750| Upside: 14 percent

The scrip spurted from a low of Rs 6,317. Pullback on the upside marked a high and the stock started consolidating there. This pullback rally and consolidation has taken the form of inverted H&S price pattern on the daily chart. Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further.

Emerging bullish crossover in MACD on the daily time frame of chart suggests bullish momentum in the scrip. Indicator and oscillator also show conducive scenario in the coming sessions.

So based on the above mentioned technical structure, we expect that price may see momentum on the upside and hit our target. Buy Maruti Suzuki around Rs 7,100 with a stop loss of Rs 6,750 for a target of Rs 8,100.

DLF | Buy around: Rs 164 | Target: Rs 180 | Stop loss: Rs 156| Upside: 10 percent

The stock has corrected from the peak of Rs 193 and it has shown signs of bottoming around Rs 143. Formation of ascending triangle on the daily chart shows positive move on the upside.

A long bullish candle near demand zone on the daily chart shows the possibility of a bounceback further on the upside. With decent volume participation witnessed, we recommend a buy in this scrip at Rs 164 with a stop loss of Rs 156 for an upside target of Rs 180.

M&M | Buy around: Rs 666 | Target: Rs 725 | Stop loss: Rs 630 | Upside: 9 percent

After hitting the recent peak of Rs 814, the stock has slipped lower till Rs 660 from where chances of developing of demand is higher and it has been trading in a rangebound zone of Rs 560-710.

Currently, the stock is trading near its multi support horizontal line and is making double bottom at lower levels. Positive divergence in RSI on the daily chart and declining histogram in MACD on the weekly chart suggest upside momentum.

As long as it sustains above Rs 630, possibility of moving on the upside is higher and it can hit our first target of Rs 725. Buy M&M around Rs 666 with a stop loss of Rs 630 for the target of Rs 725.

Kotak Mahindra Bank | Buy around: Rs 1,280 | Target: Rs 1,350 | Stop loss: Rs 1,248 | Upside: 5 percent

From last few days, the scrip has been consolidating and has formed cup and handle pattern on the weekly chart. It has given breakout on the upside and is retesting its neckline. Sustainability of RSI above 50 on the daily chart is giving cues that scrip can take a positive turn.

Currently, the stock is trading above all its important moving that sets positive tone for the scrip. One can buy the scrip around Rs 1,280 with a stop loss of Rs 1,248 for the target of Rs 1,350.

The author is Head – Technical & Derivative Research at Narnolia Financial Advisors Ltd.

Disclaimer: 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.

Disclosure: Narnolia Financial Advisors Ltd/Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks.

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