The year 2018 will go down in history as the year of highs and lows. Nifty and Sensex hit fresh record highs in August 2018. But since then, the ride has been bumpy — Nifty50 has fallen a little over 7.4 percent while Sensex witnessed a decline of nearly 7 percent.
Most technical experts feel that the trend for the market still remains to be on the upside, however, volatility could not be ruled out entirely as we step into the election year.
Most experts feel that Sensex or Nifty are likely to trade in a range till the elections are over and some clarity emerges in terms of which party will form the Centre government.
“Market may continue to remain volatile in the first 4-6 months partly due to elections and partly due to technical breakdowns on the long-term charts. Based on our long-term trend studies, as of now, 10,280 is looking like a strong support on monthly charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Violation of 10,280 shall lead to a breach of 10,000 with initial downside targets placed in the zone of 9,985–9,851 whereas upsides in the first 6 months appear to be capped with no new highs but in the best case for next 6 months, a target of 11,400 can be projected,” he said.
Once the election uncertainty is out and we have a stable government at the Centre, an attempt towards 40,000 on the Sensex is possible, suggest experts. But, gains can only be sustained if we see a recovery in earnings growth.
“We expect earnings growth to drive markets to post the election results. Earnings growth is expected to rebound strongly from Q3FY19 led by corporate banks. We feel that volatility in the run-up to the general elections would provide a good entry point,” Jyoti Roy, Deputy Vice President, Angel Broking told Moneycontrol.
“We expect the Sensex to trade in a range of 40,000-45,000 by the end of 2019 depending upon the outcome of the general elections,” added Roy.
For Nifty, the index after testing its all-time highs at 11,760 levels witnessed a vertical fall towards 10,000 mark in mid-2018 and took support at the psychological level of a five-figure mark.
“We might witness some consolidation in the first half of the year with stock-specific action but in later part once again sharp upside till 12,000 levels can’t be ruled out,” Shitij Gandhi, Senior Research Analyst, SMC Global Securities told Moneycontrol.
“On the contrary, any decisive move below 9,900 mark will open the gates for bears which can take the index towards 9,400 level as well,” he said.
Here is a list of top 15 stocks, based on technical charts, that could give 13-40% return in 2019:
Analysts: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
Siemens: Buy| LTP: Rs 970| Target: Rs 1,230| Stop Loss: Rs 850| Return 26%
This counter topped out 3 years back after hitting a lifetime high of 1559 in August 2015. Since then, it was in a strong downtrend and carved out a descending channel in this process.
In October 2018, it appears to have bottomed out after taking support on the demand line of the said channel with a low of 850. Hence, it can be an opportunity for investors to look into this counter and accumulate between 950 – 900 levels.
In case if it resumes its up move after the consolidation, the next big target could be placed at Rs 1,230 as it can retrace 62% of its last leg of the fall from the highs of Rs 1,471 – 850.
Bank of Baroda: Buy| LTP: Rs 111.70| Target: Rs 150| Stop Loss: Rs 80| Return 34%
Unfortunately, PSU banks have become untouchables to many and hence they can be a better contrarian bet at this point in time as some of the bigger banks are trading less than one time to book and with single-digit earnings multiple.
Technically speaking, this counter appears to be moving roughly in a broader range of 210 – 85 on the long-term charts and appears to have bottomed out at a recent low of 91. But, in any case, strong support is visible around 85 levels.
Hence, investors should accumulate this counter between 110 – 90 kind of levels. In case it stabilizes and rallies eventually it should test its interim top placed at 150 levels. A stop suggested for the trade is a close below Rs 80.
Mahindra & Mahindra: Buy| LTP: Rs 758| Target: Rs 933| Stop Loss: Rs 685| Return 23%
Since 2013 this counter is moving in a well-defined ascending channel with multiple touch points and appears to be having a strong support around 700 levels as it bounced back on a couple of occasions from the demand line of the said channel.
Hence, if the stock sustains above Rs 700 levels, a decent target of Rs 933 can’t be ruled out in this counter over a period of time. Hence, investors should accumulate this counter between 730 – 700 kind of levels. A stop suggested for the trade is a close below Rs 685.
Analyst: Shitij Gandhi, Senior Research Analyst, SMC Global Securities.
Federal Bank: Buy| LTP: Rs 92.75| Target: Rs 114| Stop Loss: Rs 70| Return 23%
The stock has been an underperformer throughout 2018 and was trading in a sloping channel with lower high and lower lows pattern on the weekly charts.
However, for the past few weeks, the stock price has managed to hold above its 200-DEMA and has given a breakout above the falling trend line.
The positive divergence on the secondary indicators on the long-term charts also suggest that prices may move further up in the coming weeks. One can accumulate the stocks in a range of 85-90 for an upside target of 114 and a stop loss below 70.
Colgate Palmolive India: Buy| LTP: Rs 1301| Target: Rs 1,500| Stop Loss: Rs 1,050| Return 15%
The stock is maintaining its uptrend on the long-term charts and is trading well above its short and long-term moving averages.
The fresh breakout above the previous high has also been observed this month which can trigger follow up buying into the stock.
At the current juncture, the stock has also given a breakout after making a rounding bottom pattern which is a bullish signal for the prices moving forward. One can accumulate the stock in a range of 1250-1300 for an upside target of 1500 and a stop loss below 1050.
Berger Paints (I): Buy| LTP: Rs 323| Target: 390| Stop Loss: Rs 270| Return 20%
After marking a 52-week high of 349.90, in mid-2018, the stock witnessed a hefty profit booking from higher levels and once again fell towards its 100-DEMA on the weekly interval charts.
However, the stock witnessed a “V” shaped recovery in prices and reclaimed 300 mark on local bourses. At the current juncture, the stock has formed bullish flag pattern on medium-term charts and is on verge of a breakout above the same. So, one can accumulate the stocks in a range of 315-325 for the upside target of Rs 390 and a stop loss below 270.
Cummins India: Buy| LTP: Rs 834| Target: Rs 945| Stop Loss: Rs 705| Return 13%
On the weekly charts, the stock has been trading well below its short and long term since the beginning of the year but some lower level buying emerge in later half as once again stock surpassed above its 200-DEMA.
On the technical front, the stock made a Double Bottom pattern around 635 levels and bounce back. Additionally, the stock has also formed a W-pattern on the weekly interval which is a bullish sign for the prices moving forward.
One can accumulate the stocks in the range of Rs 790-805 for an upside target of Rs 945 and a stop loss below Rs 705.
TVS Motor Company: Buy| LTP: Rs 575| Target: Rs 656| Stop Loss: 500| Return 14%
Till date, the stock has fallen approximately 25 percent from its 52-week high of Rs 794 levels. However, on technical ground, the stock has been maintaining well above its 200-DEMA on weekly charts and seen consolidating in range of 515-570 from last more than eight weeks.
At the current juncture, the stock has formed a symmetrical triangle pattern on the medium term interval and has also managed to give a breakout above the same this week.
The hefty volumes with the rise in prices also suggest that there is more potential in the stock moving forward. So, one can accumulate the stocks in a range of 560-570 for the upside target of 656 and a stop loss below 500.
Analyst: Mustafa Nadeem, CEO, Epic Research
UPL: Buy| LTP: Rs 767| Target: Rs 950| Stop Loss: Rs 700| Return 23%
The stock has ended its short-term correction on higher timeframe while prices are now coming out of the recent correction phase which is a positive sign for the bulls.
A positive crossover in long-term moving averages (MA) indicates the strength in trend and we believe it is an opportune moment to create long side position in the stock,
Raymond: Buy| LTP: Rs 856| Target: Rs 1,140| Stop Loss: Rs 720| Return 33%
A breakout from a declining channel which was almost seen for a year makes the stock a healthy buy even at current levels.
Given its overall formation of higher highs and lows establishes recent trough which is now acting as a viable support and gives an indication for higher targets of 1140 - 1150.
Yes Bank: Buy| LTP: Rs 181| Target: Rs 254| Stop Loss: Rs 144| Return 40%
The stock has corrected a lot from its all-time peaks and has seen the worst correction in the last 8 years since the financial crisis.
A long-term established support line coincides with our support level established placed at 150 levels while a range-bound consolidation in the last few weeks indicates a bottoming out formation. The stock can be accumulated with the defined risk of 144 and a target of 254.
Power Finance Corporation: Buy| LTP: 91.65| Target: Rs 135| Stop Loss: Rs 65| Return 47%
The stock is in a sideways range since the last 10 years establishing a lower range of around 70 and a higher range of around 160.
A cyclic analysis makes this stock an investment bet for a year with lower support placed at 65 which is acting as a risk and range of 70 - 80 can be a good buying opportunity for a target of 135.
Analyst: Amit Gupta, Head of Derivatives at ICICIdirect
Asian Paints: Buy| LTP: Rs 1,334| Target: Rs 1,635| Stop Loss: Rs 1,110 | Return 22%
Asian Paints has continuously found support near its long-term mean levels. Recently, after testing these levels, the stock recovered on the back of a surge in delivery.
We believe that with lower crude prices and expected higher FII flows, fresh upsides are likely to be seen in the stock.
Nestle India: Buy| LTP: Rs 11,181 | Target: Rs 13,550 | Stop Loss: Rs 9,075 | Return 21%
After a long consolidation since 2015, Nestlé India surpassed its mean+2 sigma in 2017. Since then, all major declines were limited towards these levels. We expect the positive bias to remain intact in the stock above these levels.
United Spirits: Buy| LTP: Rs 636| Target: Rs 775| Stop Loss: Rs 520| Return 21%
United Spirits tends to find directional move once it surpasses its long-term mean in either direction. Currently, long-term mean for the stock is near Rs 520 above which the stock remains a buying opportunity.
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Source: Moneycontrol
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