#39;REC, ITC among 5 stocks picks that can return up to 20%#39;
The index gained strength in the first half of the week; however, lost its steam on Budget day and closed flat around 11,800 in a volatile session. Nifty traded in a tight range of 11,980-11,800entire last week and gave a higher closing.
Nifty is trading near its major simple moving averages 20-DMA that is rising and placed around 11,828 and 50-day SMA is standing near 11,725 that indicates mid-term upside movement.
This month’s pivot point is placed around 11,839 and S1 level is around 11,574, which indicates Nifty needs to sustain above 11,839 for strong directional momentum, whereas trend will reverse only below 11,574.
India VIX is trading below 13 justifying stable movement, which will continue further. Major trend line support on lower time frame and principle of polarity is showing support near 11,740-11,730.
After opening lower, Bank Nifty took support from previous week’s closing levels (31,100) and managed to close higher forming a bullish body candlestick pattern.
Banking index has also given confirmation of strong uptrend by closing near last week’s high (31,490) and buying interest was seen at lower levels even as supports shifted slightly higher. As long as low of the previous week 31,100 is intact, it will trade higher towards its life high placed around 31,783.
Here are top stock trading ideas that can give good returns:
Rural Electrification Corporation: Buy around Rs 158 |Target: Rs 190| Stop loss: Rs 140| Upside: 20 percent
The scrip is moving in a well defined ascending channel with multiple touch point and appears to be having strong support around Rs 158- 160 as it bounced back a couple of time from the demand line. It has also maintained its uptrend on the long term chart and is trading well above its short and long term moving averages.
The momentum oscillator, RSI also favours the price pattern. One can accumulate the stock around Rs 158 for an upside target of Rs 190 and a stop loss below Rs 140.
India Cements: Buy around Rs 99 |Target: Rs 115| Stop loss: Rs 90| Upside: 16 percent
The stock spurted from a low of Rs 90, pulling back on the upside and marked the high of Rs 109 and started consolidating there. This pullback rally and consolidation has taken the form Pole and Flag price pattern from last few days.
Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further. Indicator and oscillator are also showing conducive scenario in the coming sessions.
So based on the mentioned technical structure, we expect that price may see momentum on the upside and hit our target of Rs 115 with stop loss below Rs 90.
Dabur India: Buy around Rs 402 |Target: Rs 450| Stop loss: Rs 378| Upside: 12 percent
The stock bottomed near Rs 357-360 and has been forming Inverted Head & Shoulder pattern on the weekly chart. It has been showing upswing move towards channel resistance line from where stock can give breakout on the upside.
Positive crossover in MACD on the weekly chart is also creating positive rhythm in the scrip. Sustainability of daily RSI above 50 adds the conviction of buying the scrip around Rs 402 for the target of Rs 450 with a stop loss of Rs 378.
RBL Bank: Buy around Rs 620 |Target: Rs 680| Stop loss: Rs 588| Upside: 10 percent
On a weekly chart, the stock has taken support from its horizontal trough due to the concept of point of parity that indicates halt in the downswing of the scrip. On a daily chart, it took support from its rising trend line that gives buying opportunity in the scrip.
Moreover, Bullish crossover in MACD indicates positivity in the counter. Based on the above technical set up, we are expecting an upside momentum in the counter in the coming days for the target of Rs 680 with a stop loss of Rs 588.
ITC: Buy around Rs 278 |Target: Rs 295| Stop loss: Rs 267| Upside: 7 percent
Prices of ITC has seen a sharp rebound after hitting a low of Rs 268. Emergence of long bull candles on daily charts gives the possibility of a pullback at higher side in coming sessions.
Moreover, positive crossover in MACD and positive divergence in RSI imply upsurge move. Breakout is expected to come above Rs 282 from where it will increase its velocity.
Sustainability of prices above Hammer candle pattern supports bullish bias in the stock. Buy ITC around Rs 278 with a stop loss of Rs 267 for the target of Rs 295.
The author is Head of Technical & Derivative Research at Narnolia Financial Advisors Ltd.
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