The Nifty50 managed to close on a positive note for the second straight day backed by earnings boost. After making a cautious start, amid weak global cues, markets traded in red terrain for the most part of the day.
But, it finally managed to close above the 10,600 mark forming a bullish candle pattern on the daily scale. The Relative Strength Index RSI on the Daily Chart is at 65.42 showing an upward momentum.
The MACD is also trading above the zero line with positive crossover, which indicates that the bias could remain bullish for the next few trading sessions. India VIX fell by 9.51 percent at 11.89. A decline in VIX suggests limited downside and a consolidation.
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The Nifty50 has been making higher highs higher lows on a weekly scale, with support seen around 10,560 levels (50 percent retracement of January to March downfall) and then 10,485 levels (mid-band of Bollinger band), which indicates a continuation of the uptrend is still intact.
In the mid-term Nifty has potential to move towards 10,705 levels (61.8 percent retracement of January to March correction) and then 10,981 levels (upper band of Bollinger band).
On the Options front, maximum Call open interest of 45.02 lakh contracts is seen at strike price 10,700, followed by 11,000, which now holds 31.09 lakh contracts and maximum Put open interest of 49.64 lakh contracts is seen at strike price 10,500, followed by 10,400 which now holds 40.47 lakh contracts.
As per the option data, the support level in Nifty has shifted higher in the April series compared to last week and the immediate support seen around 10,500-10,400 levels whereas 10,700 will act as a major hurdle.
Here is a list of top 4 stocks which could give up to 11% return in the short term:
Dalmia Bharat: BUY | Close: Rs 3004 | Target: Rs 3350 | Stop loss: Rs 2770 | Return: 11.52%
Post the correction in January, the stock slipped into consolidation mode. After three and a half months, the stock has given a breakout from this congestion zone with higher volumes.
The daily indicators such as Relative strength index (RSI) and MACD are in buying mode. We expect the stock to extend this rally towards our mid to long-term target of Rs 3350 with a stop loss below Rs 2770 on a closing basis.
Cadila Healthcare: BUY | Close: Rs 404.90 | Target: Rs 452 | Stop loss: Rs 380 | Return: 11.6%
After making a marginal consolidation, the stock has given a breakout from symmetrical triangle pattern above Rs 393-394 levels on Monday.
Volumes during this price action were almost double to its average daily volumes, indicating strong buying interest after this breakout.
The Relative strength index (RSI) is making the higher bottom and higher top and MACD is trading with a positive crossover whereas (+) DI just cross above (-) DI, which indicates that the stock has the potential to move higher.
Traders can buy the stock around current levels and add on dips around Rs 396-399 with a stop loss below Rs 380 (closing) for a target of Rs 452.
Sterlite Technologies: BUY | Close: Rs 354.85 | Target: Rs 392 | Stop loss: Rs 329 | Return: 10.42%
In daily scale, the stock has given a breakout from the Ascending Triangle pattern above Rs 342-344 levels on Monday with higher volumes than its daily average volumes.
The Relative strength index (RSI) found support on its twenty days average and pointing upwards whereas MACD is trading with positive crossover.
Based on the above observations, traders can buy the stock in the range of Rs 350-355 with a stop loss below Rs 329 (closing) for a target of Rs 392.
Yes Bank: BUY | Close: Rs 324 | Target: Rs 360 | Stop loss: Rs 302 | Return: 11.11%
In the daily scale, the stock has formed an Inverse Head and Shoulders pattern and gave a breakout above its neckline of Rs 320-321 levels with higher volumes, indicating strong buying interest.
The Daily Relative Strength Index (RSI) is showing an upward momentum and the MACD is trading with positive crossover whereas (+) DI trading above (-) DI from last seven trading days.
Based on the above observations, the stock is likely to head higher in the near to mid-term. Positional traders can buy the stock in the range of Rs 322-324 with a stop loss below Rs 302 (closing) for the target of Rs 360.
Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.