After witnessing a blockbuster November, the Sensex and Nifty have fallen around 800 points and 300 points, respectively, in December so far. The sudden fall opened up room for both buy-side and sell-side trading ideas.
The Indian market witnessed profit booking in the first week of December, thanks to weak global cues, uncertainty around results of assembly elections in five states due next week, and the rupee depreciating vis-à-vis
the dollar.
The selling pressure may persist in the coming week and investors are advised to remain cautious. Bulls will only be able to take control once the Nifty reclaims its 200-DMA, which is placed at around 10,750 on a closing basis, experts suggest.
"The Nifty has formed a rising wedge pattern on the daily chart and has also broken down from the same. This indicates that the short term trend has once again broken," Hadrien Mendonca, Senior Technical Analyst at IIFL, told Moneycontrol.
"In addition, Nifty has also breached below its long-term 200-DEMA. For any kind of positive momentum to resume, Nifty has to re-enter the rising Wedge and also close above the 200-DEMA of 10700," he said.
Here are 8 stock trading ideas that could return 5-14% in the next 1-6 months:
Analyst: Hadrien Mendonca, Senior Technical Analyst, IIFL
Bajaj Finserv: Sell| LTP: Rs 5,673| Target: Rs 5,375| Stop Loss: Rs 5,802.5| Return: 5%
The stock has been consolidating for the past three trading sessions and has finally broken down from the rising channel pattern seen on the daily chart.
Our weekly chart analysis indicates that the stock is on the verge of forming a ‘Bearish Engulfing pattern’. The stock has also broken below its long-term 200-DEMA further accentuating our bearish stance on the stock in the near-term.
Ashok Leyland: Sell December Futures| LTP: Rs 101.90| Target: Rs 95| Stop Loss: Rs 105.5| Return: 6%
The stock has been under pressure for the past four weeks and has finally broken down from a Descending Triangle pattern on the daily chart.
The stock has also broken below its short-term moving averages indicating further downside cannot be ruled out.
Jindal Steel: Buy| LTP: Rs 149.40| Target: Rs 164| Stop Loss: Rs 142| Return: 10%
The stock has fallen significantly in the past four weeks and has now reached its falling trendline support zone. It has also formed a ‘Hammer’ candlestick pattern on the daily chart giving early signs of a short-term reversal. The risk-to-reward ratio also seems to be in favor of the bulls. Investors can hold longs with a mentioned stop loss on a closing basis.
Analyst: Aditya Agarwal, Head of Technical Research, Way2Wealth Brokers
PVR: Buy above Rs 1,531| LTP: Rs 1,489| Target: 1,700| Stop Loss: Rs 1,428| Return: 14%
Looking at the weekly chart, the stock has been correcting in a ‘Downward Sloping Channel’ pattern since the beginning of May 2017. Subsequently, the stock formed strong base near 1100 – 1060 zone and rebound sharply.
As a result, PVR broke the upper band of the channel pattern which led to a breakout. The weekly RSI (14) entered above the 60 level which supports our hypothesis.
Hence, we advocate traders to buy this stock above 1531 with a price target of 1700 and a stop loss placed below 1428.
Reliance Industries: Sell at Rs 1,130-1,140| LTP: Rs 1,123| Target: Rs 1,050-1,016| Stop Loss: Rs 1,187| Return: 6%
After forming a ‘Bullish Divergence’ in the month of October; 2017, stock saw decent run up and tested 1180 – 1190 zone.
Looking at the daily chart, the said zone coincided with the 50% retracement of its entire fall from the top of 1329 to the bottom of 1016.40.
During Thursday’s trade, Reliance broke the upward sloping trend line drawn from the swing low of 1016.40 which indicate that the stock is likely to resume its downtrend.
Hence, we recommend traders to go short in this counter in a range of 1130 – 1140 with a down side target of 1050 first and in case of further pessimism stock can retest its bottom of 1016. A stop loss for short positions should be placed above 1187.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Voltas: Sell at 537| LTP: Rs 538| Target: 480| Stop Loss: Rs 570| Return: 11%
Looking at the daily chart, the stock reversed after testing its 200-DMA during November 20, 2018. Subsequently, stock descended and broke the upward sloping trend line join from the bottom of its swing low of 472.25.
The daily RSI (14) reversed after testing the 60 levels. Also, the weekly Lower Top Lower Bottom formation is intact. Hence, we recommend traders to go short in this counter at the current level of 537 with a downside price target of 480. A stop loss should be placed above 570 on a closing basis.
Analyst Name: Dharmesh Shah – Head Technical, ICICI Direct.com Research
ABB: Buy| LTP: Rs 1,399| Target: Rs 1,550| Stop Loss: Rs 1,315| Return 11%| Time Frame: 6 months
The share price of ABB has been oscillating in an upward sloping channel over the past two years (drawn adjoining lows of January - December 2016 of 955 -1018, respectively).
Recently, the prices retraced 80% of the last leg of the up move (1129 – 1517), placed at 1206 levels coinciding with the lower band of the rising channel. As a result, the stock formed a higher low, signifying the conclusion of an ongoing corrective phase.
Going ahead, we expect the stock would hold the key value area of Rs 1320-1330 and resolve higher, as it is the lower band of the last two week’s consolidation and 50 days EMA placed around 1316 levels.
Among momentum oscillators, the weekly 14-periods RSI has been inching upward after recording bullish crossover, indicating an acceleration of positive momentum in the short term.
Based on the above technical evidence, we believe that the stock is likely to continue with its positive momentum and head towards 1550 in the medium-term as it is the price parity of the August-September 2018 up move (1150 to 1517) added to the October 2018 low of 1190 project upside towards 1550 levels.
Marico: Buy| LTP: Rs 359| Target: Rs 410| Stop Loss: Rs 329| Return: 14%| Time Frame: 6 months
Marico is one of India's leading consumer products companies operating in the beauty and wellness space. Copra, which accounts for 45-50 percent of the company’s material costs, is a key raw material used to make coconut hair oil.
We believe the fall in copra prices from Rs 144.33 per kg from January 2018 peak to 91.65 per kg in October 2018 augurs well for Marico.
The share price of Marico has undergone periodic secondary phases of consolidation during a multi-year secular up move. Prices have been forming higher peaks & troughs on weekly charts as buying demand emerged from key value area of 285.
We believe that the past six quarters of healthy consolidation (285-385) has set the stage for the next leg of the up move. Hence, this offers a fresh entry opportunity from a medium-term perspective
The last three years price action has been captured in a well-defined upward sloping channel (drawn adjoining lows of November 2015-November 2016 of 189 and 235 projected from August 2016 at 307).
The lower band of the rising channel is placed around 330 levels which also coincides with the 50% retracement of the last leg of the up move (295–369) also placed at 332 levels.
In a nutshell, we expect the stock to resolve higher from here on and head towards 410 as it upper band of the upward sloping channel which also coincides with the 123.6% external retracement of last decline (388–283), placed around 412 levels.
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Source: Moneycontrol
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