Experts say traders should ride the momentum and avoid going contra at current levels, while taking some profit as well.
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It was a historic week for the Indian stock markets with the Nifty 50 crossing 16,500 and the S&P BSE Sensex conquering the 55,000 mark. The Nifty 50 rose 1.8 percent, while the Sensex gained over 2 percent in the week ended August 13.
The Nifty 50 recorded a breakout above 16,000 for the first time on August 3 and since then, there has been no stopping the rally. The index has added 766 points so far in August, or roughly 5 percent, in only 10 trading sessions.
There was some profit-taking at higher levels, but every dip was bought into, suggesting that there is more upside to the rally. The Nifty closed in the green for the second consecutive week.
Experts advise traders to ride the momentum, which is here to stay, and avoid going contra at current levels, but in the meantime take some profits as well.
“Nifty has reached 16,500 without the participation of the banking space, which is hard to believe. It would be unfair to expect a similar pace from the Nifty to reach new milestones,” said Sameet Chavan, chief analyst-technical and derivatives, at Angel Broking. “Since there is no sign of weakness, we are not advising to go against the trend but we reiterate when things start to look hunky-dory everywhere, wise traders choose to take some money off the table.”
Chavan advised continuing with a one-step-at-a-time approach and booking timely profits. On the technical charts, sacrosanct support is placed at 16,200-16,170, before which 16,400-16,300 are considered the immediate levels, he said.
According to Chavan, it is hard to project any level on the upside because this is uncharted territory. Still, every 100-point rally from hereon should be treated as the upside range.
Here is a list of 10 trading ideas by experts for the next 3-4 weeks. Returns are based on the August 13 closing prices:
Sameet Chavan, chief technical & derivatives analyst at Angel Broking
Larsen & Toubro (L&T) | LTP: Rs 1,665.05 | Target price: Rs 1,740 | Stop loss: Rs 1,624 | Upside: 5%
After the March 2020 mayhem, many stocks have seen an excellent recovery. However, this heavyweight counter had been muted for some time. From November, the momentum in this stock started to pick at a rapid pace. Since then, there has been decent buying interest.
In the past couple of sessions, this stock has been one of the major contributors to the Nifty 50’s ascent above 16,500. It has reached its new highs and the daily chart now exhibits a small rectangle pattern breakout.
Amara Raja Batteries | LTP: Rs 727.95 | Target price: 776 | Stop loss: Rs 702 | Upside: 7%
This stock has been one of the worst-performers among auto and auto ancillary stocks. After shedding more than 20 percent in the past seven months, the fall seems to have halted around a cluster of support levels on higher degree timeframe charts.
On the weekly chart, there’s been a 50 percent retracement in the rally from March 2020 lows to January 2021 highs. In addition, we can see the formation of a bullish hammer pattern. This pattern has already been activated and hence we reiterate buying for a short-term price target of Rs 776.
Mehul Kothari, AVP – Technical Research at AnandRathi
Bharti Airtel: Buy | LTP: Rs 637 | Stop Loss: Rs 595 | Target: Rs 695 | Upside: 9%
The stock has failed several times after confirming a breakout, but this time it has managed to break out above its lifetime high of Rs 623 on a closing basis. There could be a fear of missing out among traders following this breakout confirmation and that could lead to a fresh upside.
Traders are advised to buy the stock near Rs 630 with a stop-loss of Rs 595 for a potential upside target of Rs 695 in the next 3-4 weeks.
DLF: Buy | LTP: Rs 332 | Stop Loss: Rs 300 | Target: Rs 375 | Upside: 12%
Previously, we covered DLF near the Rs 300 mark and the target was achieved. Now, DLF has confirmed a multi-year breakout that cannot be ignored. The theoretical price target for the pattern is at about Rs 450.
In the coming months, any significant dip in the stock price could be used as a buying opportunity. Traders can go long in the stock between Rs 330 and Rs 320 with a stop-loss of Rs 300 for an upside target of Rs 375.
PVR: Buy | Buy above Rs 1420 | LTP: Rs 1412 | Stop Loss: Rs 1360 | Target: Rs 1540| Upside 9%
The line chart on the daily scale of PVR shows that the stock is on the verge of a major trendline breakout above the Rs 1,420 mark (daily closing basis). This level coincides with the neckline of an inverse head-and-shoulders pattern.
Once the stock closes above Rs 1,420, it will activate the pattern. Traders are advised to buy the stock above Rs 1,420, with a stop-loss of Rs 1,360 for an upside target of Rs 1,540 in the coming 3-5 weeks.
Aditya Agarwala, senior technical analyst, YES SECURITIES
Tata Motors: Buy | LTP: Rs 307 | Target: Rs 325 | Stop Loss: Rs 298 | Upside 6%
The stock resumed an uptrend after breaking out of a narrow consolidation pattern on good volumes. Its relative strength index (RSI) has turned upwards from the lower end of the bull zone, i.e. 40, after forming a positive divergence, confirming the bullishness.
HDFC Ltd: Buy | LTP: Rs 2703 | Target: Rs 2840 | Stop Loss: Rs 2640 | Upside 5%
The stock has resumed its uptrend after breaking out of a bullish flag pattern on good volumes. Further, its RSI has turned higher from 60 levels, confirming a strong uptrend dominance in the stock.
Rajesh Palviya, VP-Technical & Derivative Research, Axis Securities
KPIT Technologies Ltd: Buy | LTP: Rs 332 | Target: Rs 353-362 | Stop Loss: Rs 313| Upside 6-9%
On the daily chart, the stock has witnessed a couple of weeks of “consolidation range” breakout at Rs 318 levels. The stock is well placed above its 20- and 50-day SMAs, which reconfirm bullish sentiments.
Rising volumes at the breakout zone formed on August 13 signal increased participation. The stock is in a strong uptrend across all timeframes, forming a series of higher tops and bottoms.
The daily and weekly RSI is in a bullish mode, which supports rising strength as well as momentum. The analysis indicates an upside to Rs 353-362. The holding period is 3-4 weeks.
Polycab India Ltd: Buy | LTP: Rs 1898 | Target: Rs 2013-2055 | Stop Loss: Rs 1800 | Upside 6-8%
On the daily chart, the stock has witnessed two weeks of the “consolidation range” breakout at about Rs 1,880, which signals a strong comeback for the bulls. We have seen huge volumes on the breakout that signal increased participation near the breakout zone.
The stock is in a strong uptrend and continues to form a series of higher top and higher bottom formations on the weekly and monthly charts. The stock has recaptured its 20-day SMA (Rs 1,856), which reconfirms the bullish trend.
The daily RSI is placed above the 50 mark, which supports rising strength. The analysis indicates an upside to Rs 2,013-2,055. The holding period is 3-4 weeks.
Gufic Biosciences Ltd: Buy| LTP: Rs 218| Target: Rs 235-248| Stop Loss: Rs 195| Upside 7-13%
On the weekly chart, the stock has witnessed a “multiple resistance” breakout at Rs 205 levels on a closing basis along with rising volumes. On the daily and weekly charts, the stock continues to scale upward, forming higher tops and higher bottoms, indicating a sustained uptrend.
The stock is well placed above its 20-week SMA, which reconfirms upside momentum. The daily and weekly RSI is in bullish mode along with a positive crossover, which supports rising strength.
The analysis indicates an upside to Rs 235-248. The holding period is 3-4 weeks.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
