Monday, 29 October 2018

Continue with sell on rise strategy unless Nifty decisively surpasses 10,250

However, a fall below 10,000 opens the room for 9,950-9,700 zone, said Shabbir Kayyumi, Head — Technical & Derivative Research at Narnolia Financial Advisors



Nifty traded weak in the last week and closed with over 2 percent loss. The index witnessed a sell-off on the back of weak global cues. If it manages to sustain and hold above 10,150, then there is the possibility of a bounce-back towards 10,290 and then 10,450 levels.
However, a fall below 10,000 opens the room for 9,950-9,700 zone. One should continue to sell on the rise for lower levels unless benchmark index decisively breaches 10,250 and closes above it.
Since Nifty has closed below its 5-DMA (10,154), it suggests weakness in benchmark index in the very short term. At the same time, Nifty is trading below all of its major moving averages — 20-DMA (10,456), 50-DMA, 100- DMA and 200-DMA (10,770) which is a bearish sign in the medium term.
Hope for the market is Kagi support around 9,998. Moreover, there is specific bullish Wolfe Wave Pattern formation at current junctures. As per the pattern, Nifty should cross 10,550 once it closes above 10,250.
Interestingly, Nifty has rollover at 75 percent in October expiry week, which is the highest in the last six month. Backtesting studies say, whenever such a high percentage of rollover occurs in a downtrend, prices change their previous month’s trend.
The Bank Nifty has a strong support near 24,300. Since last few sessions, the index is trading around 25,400 on higher side and 24,300 on the lower side. Nevertheless, these should provide strong support, unless Bank Nifty decisively trades below it.
Here are five stocks which can give up to 15 percent return:
Can Fin Homes | Rating: Buy | Buy Range: Rs 255-260 | Target: Rs 297| Stop loss: Rs 240 | Upside: 14.2 percent
The stock recently bottomed out around Rs 216 and then rallied over more than 17 percent after the price chart formed a double bottom pattern. The MACD has given bullish crossover in positive territory on the daily chart implying further strength.
Double bottom price break out is expected above Rs 265 and RSI has already given trend line breakout which further confirms its bullish bias. Strong support is seen near Rs 240-245 where congestion zone is seen which suggesting further strength. One can go long the stock around Rs 255-260 with a stop loss at Rs 235 for the target of Rs 297.
Container Corporation | Rating: Buy | Buy at: Rs 588 | Target: Rs 650 | Stop loss: Rs 558| Upside: 10.5 percent
The scrip seems to be bottoming at its lower level of Rs 542 from where it formed morning star on the daily chart suggesting upsurge. RSI seems to be bottoming out from its oversold levels which are giving cues that the stock price can rise.
Rising histogram in MACD in the negative territory suggesting its upside moves in coming sessions. We suggest buying the scrip above Rs 588 for the target of Rs 650 with a stop loss at Rs 540.
Havells India | Rating: Buy | Buy range: Rs 600-605 |Target: Rs 662 | Stop loss: Rs 570 | Upside: 9.5 percent
Prices of Havells has seen a sharp rebound after hitting a low of Rs 540. The Emergence of Head and Shoulders on an hourly chart is giving the possibility of pullback on a higher side in the coming sessions. Moreover, positive crossover in MACD and sustainability of RSI above 50 imply upsurge move.
Breakout is expected to be above Rs 610-613 from where it will increase its velocity. Sustainability of prices above Bullish Belt Hold candle pattern supports bullish bias in the stock. Buy Havells around Rs 600-605 with a stop loss at Rs 570 for the target of Rs 662.
Hero MotoCorp | Rating: Buy | Buy at: Rs 2,767 | Target: Rs 2,940| Stop loss: Rs 2,640| Upside: 6.2 percent
The stock seems to be bottoming at its lower level at Rs 2,648 from where it formed morning star on the daily chart suggesting upswing. The scrip took support from its lower levels as principal of polarity occurred on the daily chart along with oversold RSI. The indicators are giving cues that scrip can take a turn towards positive side.
The principal of polarity can provide a strong support in coming sessions. Aforementioned rationale suggests buying in the scrip above Rs 2,767 for the target of Rs 2,940 with a stop loss of 2,640.
Bajaj Finserv | Rating: Buy | Buy at: Rs 5,465 | Target: Rs 5,775 | Stop loss: Rs 5,200| Upside: 5.67 percent
After hitting the peak of Rs 7,200, the stock has slipped near the low of Rs 4,995 from where the chance of a surge in demand is higher. It has been trading in a rangebound zone of Rs 5,462 and Rs 5,258. As of now, the formation of inverted Head and Shoulders on the hourly chart is giving cues to accumulate this stock at lower levels.
Moreover, monthly parity is seen near Rs 5,300-5,350 and breakout is expected above Rs 5,465. As long as it sustains above Rs 5,200, the possibility of upside is higher and a trader can take entry above Rs 5,465 with a stop loss of Rs 5,200 for the target of Rs 5,775.

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