The benchmark indices started last week on a positive note, but fear of an escalation in the Indo-Pak conflict kept traders on the sidelines. However, bulls regained some confidence on the last day of week (March 1), led by temporary relief in geopolitical tensions. The Nifty closed with a weekly gain of 0.6 percent at 10,863.50.
On the monthly chart, the Nifty has formed three indecisive candles in a row, indicating that trend is completely missing for the last three months. All major moving averages on a daily timeframe are trading almost flat, reflecting the tight rangebound move.
Prices are oscillating between their 100 and 50 day moving average. Relative Strength index (RSI) is moving in the 40-60 range since November 2018 and we cannot expect any fresh trend until the range breaks on either side decisively.
The broader range as per current technical set-up is still intact i.e. 10,580 and 11,000. In the coming week as well, we can expect this rangebound move to continue. Based on Fibonacci projections, resistance for the week is likely to be at 11,035, which is its 61.8 percent retracement level of last week's range. If it trades on the higher side, the Nifty could further extent the move till its recent high of 11,118.1. Support on the other hand exists at 10,749 and 10,580 levels.
Options data suggest that a sell on rise approach should be adopted until 11,035 levels. Volatility index has settled at 16.27, suggesting that a cautious approach is required as the trend might be missing, but volatility is not ruled out in coming days.
Here is the list of three stocks that could return 8-10 percent in the short term:
Apollo Tyres: Buy | CMP: Rs 219.9 | Target: Rs 243 | Stop Loss: Rs 204 | Return: 8%
Keeping a higher time frame chart in view, the stock has retraced till 61.8 percent of latest swing move. On weekly chart there is volatility divergence and a formation of 'W' pattern. The pattern indicating that volatility on second bottom is much lower as compared to first bottom and bounce back is expected.
On daily chart stock has breached the falling trend line resistance and RSI has started trading in positive zone after six months. Prices have started tagging the upper Bollinger band and can be bought for short term gain.
Century Textiles: Buy | CMP: Rs 830.75 | Target: Rs 896 | Stop Loss: Rs 790 | Return: 8%
Monthly time frame is trading at 50-Day Moving Average and formed doji candlestick pattern last month after a decent correction.
On weekly chart counter has formed a recent bottom inside the Bollinger band as compared to previous bottom which was formed outside the band. On daily chart prices are tagging the upper Bollinger band and RSI trading in positive zone. Thus, can be bought for short term gain.
REC: Buy | CMP: Rs 137.3 | Target: Rs 150 | Stop Loss: Rs 129 | Return: 10%
On weekly chart stock is going through positive exponential moving averages crossover and a range breakout. 20 period moving average is sloping upwards suggests bulls are making entry in the counter. Average directional index on daily chart is suggesting the strong trend on an upside.
RSI is trading in a positive zone and suggesting that momentum is likely to continue on an upside.
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