Albeit Nifty50 appears to have registered a breakout, above its 8-day old consolidation zone between 10,650 and 10,440 levels, however, it is not looking that convincing.
One prominent reason was that the breakout was on the back of negative advance-decline ratio and with a 64 point narrow range which depicted a small bullish candle on the daily chart whereas on the weekly charts, Nifty formed a ‘Hanging Man’ kind of formation.
Besides, it appears to be facing selling pressure from its interim top of 10,710, which was registered on October 17, from where the initial pullback rally was sold off only to make new corrective swing lows.
Apart from this 200-day moving average is placed around 10,754 levels. Hence, the entire zone of 10,710-10,844 is looking like a massive supply zone which bulls need to absorb to sail smoothly.
On the downside, if the index slips below 10,630 then it may initially lead to the test of 10,440 in the near term.
Here is a list of top three stocks which could give 10-16% return in the next 1 month:
Indian Hotels: Buy| LTP: Rs 135.65| Target: Rs 147| Stop Loss: Rs 127| Return 15%
This counter registered a breakout above its minor consolidation zone of 9 days on relatively higher volumes in the last trading session. Besides, as it is consistently trading above its 200 Day Exponential Moving Average for the last couple of trading sessions there is a bright chance that this counter can initiate a rally and jump to higher levels.
However, 139 looks like a hurdle which it should surpass as it has just broken out of its consolidation zone. In such a scenario, the initial target of Rs 147 can be swiftly expected. Positional traders are advised to buy with a stop of 127 for a target of 147.
Vodafone Idea: Buy| LTP: Rs 42.90| Target: Rs 49| Stop Loss: Rs 35| Return 16%
This counter appears to have registered a price and volume breakout as it witnessed massive gains on huge volumes in the last session which has erased losses of preceding 6 sessions in one attempt suggesting a bottom around 36.
Hence, positional traders are advised to adopt a two-pronged strategy of buying now and on declines between 40-38 levels for an initial target of 49. A stop suggested for the trade is below 35 on a closing basis.
Bank of Baroda: Buy| LTP: Rs 115| Target: Rs 126| Stop Loss: Rs 106| Return 10%
This counter appears to be consolidating in a zone of 114 – 107 with a positive bias. As sentiment in PSU Banking space is firming up, one can expect a breakout in this counter as chart structure is looking very positive.
Hence, positional traders in anticipation of a breakout should buy now and add further on declines between Rs 110 – 107 and look for a target of Rs 126. A stop suggested for the trade is below Rs 106 on a closing basis.
Disclaimer: The author is Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in. The views and investment tips expressed by investment expert 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.