Book profits on rallies as Nifty50 likely to consolidate in a range of 10,300-10,500
We expect Nifty50 will continue to consolidate in a broad range of 10,300-10,500 for the next few trading sessions before giving any fresh breakout on either side…
After confirming its breakout from ‘downward sloping’ trend line channel, Nifty has seen a decent traction and precisely retested its previous swing high of 10,479.
Now, the daily RSI (14) is approaching towards 60 levels whereas the hourly chart signals multiple bearish divergences. On the weekly line chart, the previous bottom of 10,455 (weekly closing of February 9, 2018) may act as an immediate hurdle.
Any sustainable move above 10,500 will drive the index higher towards its crucial resistance of 10,630. On the flip side, 10,355 and 10,290 are near-term support for Nifty50.
The options data is indicating a rangebound move for Nifty in the short-term. The maximum call concentration is placed at 10,500 which indicates a stiff resistance whereas on the lower side, put writing was seen at 10,300 which will act a strong support zone for indices.
Overall, we expect Nifty50 will continue to consolidate in a broad range of 10,300-10,500 for the next few trading sessions before giving any fresh breakout on either side.
Here is a list of top three stocks which could give up to 9% return in the short term:
NIIT Technologies Ltd: Buy around Rs 912 – 903 | Target: Rs 1000 | Stop loss: Rs 860 | Timeframe: 15 to 21 sessions | Return 9%
Looking at the daily chart, the stock formed a strong base near Rs 860 and a Descending Triangle pattern. Recently, the stock confirmed its breakout from the said pattern and resumed its primary trend.
The daily ‘higher top higher bottom’ formation is intact and indicates that the primary trend is on the upside. Therefore, we recommend traders to accumulate this stock in the range of Rs 912 to Rs 903 with a price target of Rs 1000 and a stop loss placed below Rs 860.
Hero MotoCorp Ltd: Buy around Rs 3725 – 3700 | Target: Rs 4030 | Stop loss: Rs 3600| Timeframe: 15 to 21 trading sessions| Return: 7.6%
Looking at the daily chart, the stock consolidated in a range and has formed a triangle pattern. During the last week, the stock confirmed its breakout from said pattern.
Recently, it saw a pullback and retested the trend line of the triangle pattern. The daily RSI (14) precisely took support near 60 levels which is a bullish indication.
Thus, we advocate traders to buy this stock in the range of Rs 3725 – 3700 with a price target of Rs 4000. A stop loss should be placed below Rs 3600.
Tata Steel Ltd: Sell around Rs 603 – 608 | Target: Rs 550 | Stop loss: Rs 630 | Timeframe: 15 to 21 trading session | Return 8%
Tata Steel has seen a decent correction from its 52-week high and hit a low of Rs 553. Subsequently, it saw a decent pullback in the past few weeks and rebounded towards Rs 611.
Looking at the daily chart, Thursday’s high coincided with the downward sloping trend line drawn from the top of Rs 748. Another big factor which supports bearish bias is that the previous bottom of Rs 607 had reversed its role post-breakdown and is likely to act as a strong hurdle.
Hence, we advise traders to go short in a range of Rs 603 to Rs 608 with a price target of Rs 550. A stop loss should be placed above Rs 630.