Podcast | Stock picks of the day: Short-term trend turns negative; 3 stocks which could give 4-9% return
As per the options data, the support and resistance levels for Nifty has shifted lower compared to last week and the immediate support is seen around 11,200 and 11,000 levels whereas 11,500 will act as a strong hurdle in September expiry.
Abhishek Mondal
Guiness Securities
The Nifty50 failed to sustain above its 50-DMA and formed a bearish candle on the daily scale to settle below the psychological mark of 11,300 on Tuesday. The selling pressure is likely to remain as long as the index stays below 11,470 levels.
Bears made a strong comeback on Monday and Tuesday as well as sentiments remained dampened since the beginning of the week due to trade war fears and volatile rupee.
The markets started Tuesday’s session on a pessimistic note and Nifty50 closed below its 50-days moving average at 11,278.90 down by 0.87 percent.
The Nifty50 formed a strong Bearish candle on the daily scale with a negative sequence of lower tops and lower bottoms in hourly scale which suggests that the short-term trend has turned in favour of the bears.
On the daily scale, the immediate support is seen around 11,170 levels (Gap support), and any violation of this level will trigger further downside towards 11,089 (100 EMA) and 10,850-10,900 levels.
On the upside, 11,470 will remain as a key resistance. The Relative Strength Index (RSI) on the daily chart is 42.31, showing negative momentum and the MACD is trading above zero line but with the negative cross of its signal line, which indicates that price may come down further in upcoming trading sessions.
The volatility index ended down by 0.55 percent at 14.41 but still trading above its heedful mark of 14, a sideways to down move in VIX suggests consolidated move in the market.
On the Options front, maximum Call open interest of 44.30 lakh contracts is seen at strike price 11,500, followed by 11,600 which now holds 40.88 lakh contracts and maximum Put open interest of 39.45 lakh contracts is seen at strike price 11,200, followed by 11,000 which now holds 35.2 lakh contracts.
As per the options data, the support and resistance levels for Nifty has shifted lower compared to last week and the immediate support is seen around 11,200 and 11,000 levels whereas 11,500 will act as a strong hurdle in September expiry.
Here is a list of top three stocks which could give 4-9% return in next 1 month:
Divis Laboratories: Buy| LTP: Rs 1379.80 | Target: Rs 1490 | Stop loss: Rs 1300 | Return: 7.99%
On the daily scale, the stock has given a breakout from its Flag pattern above Rs 1330-1332 levels on Monday with higher volumes. The Relative strength index (RSI) is showing positive momentum and MACD is trading above zero line with a positive crossover which indicates limited downside for the stock.
Based on the above observations traders can buy the stock around current levels and further add on dips around Rs 1340-1345 with a stop loss below Rs 1300 (closing) for the target of Rs 1490.
Biocon: Buy| LTP: Rs 677.10 | Target: Rs 740 | Stop loss: Rs 630 | Return: 9.29%
After making a marginal consolidation, the stock has given a breakout above Rs 675-676 levels on Tuesday with higher volumes.
The daily Relative strength index (RSI) showing positive momentum and (+) DI trading above (-) DI whereas MACD trading above zero line with positive crossover, which indicates that the stock has the potential to move higher.
Traders can buy the stock in the range of Rs 675-678 with a stop loss below Rs 630 (closing) for the target of Rs 740.
Ceat: Sell| LTP: Rs 1349.20 | Target: Rs 1295 & 1280 | Stop loss: Rs 1378 | Return: 4.43%
Ceat is continuously trading below its short and mid-term moving averages as well as below 61.8 percent retracement levels of 4th September to 10th September 2018 up move with moderate volumes in daily scale, which indicates that the bias could remain bearish for the next few trading sessions.
The Daily Relative strength index (RSI) is trading at 43.53, showing negative momentum and MACD is continuously trading below the signal line whereas directional movement also indicating the negative trend.
Based on the above observations the stock is likely to move down in the near term. A trader can sell the stock at current levels and add shorts on some technical bounce around Rs 1355-1360 with a stop loss above Rs 1378 (closing basis) for a target of Rs 1295 & 1280.
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