The Nifty has been registering new milestones day by day. On Monday, we saw Nifty extending the rally towards the new all-time high of 11,700. The next resistance for Nifty is seen somewhere at 11,768, which happened to be 138.2% Fibonacci extension level of the entire swing seen from 9,952 (March 2018 Low) to 10,929 (May 2018 Top) and from 10,929 to 10,417 (May 2018 Low).
In case 11,768 level is taken out on a closing basis, the next target comes at 161.8% extension levels, placed at 11,999. As far as support is concerned, it has now shifted upwards towards 11,532. This can be kept as a stop loss in trading long positions.
The Nifty has been maintaining a bullish setup with higher tops and higher bottoms. However, Oscillators have been gradually losing strength on the short-term charts.
RSI indicator has reached in an overbought zone not only on daily but also on the weekly and monthly chart of Nifty. There has been some negative divergence on the daily charts.
MACD indicator has been sustaining below its signal line. It is always believed that bearish trend reversal confirms only if price violates the support, which is not the case with Nifty as of yet.
Bank Nifty Index has managed to hold above the previous bottom of 27,739 on the daily charts, to close at 28264. The Bank Nifty registered an all-time high at 28,378 on 10th Aug 2018 and saw a fall afterward towards 27,739.
On 23rd August, Nifty made a lower top at 28,325 and again turned southward. Fresh breakout on the daily chart will be confirmed only if BankNifty surpasses the previous top resistance of 28,325.
That will also result into surpassing the resistance of 61.8% Fibonacci extension levels. Once 61.8% extension is taken out next target comes at 100% extension, which is placed at 29,600 levels in BankNifty. Longs should be held with the Stop Loss of 27,739.
The Nifty500 index has registered a new all-time high at 9967 levels during Monday’ session, while the Nifty Midcap index has managed to sustain above its 200-DMA after three months.
This indicates that gradually market breadth is improving. However, small-cap stocks have not been able to find their feet along with the benchmark index’s bullish momentum. As far as other sectors are concerned we like Pharma, IT and Metal space for the short to medium term.
From the derivative perspective, PUT writing is seen at 11600-11700 strike price, which limits the downside atleast till the August expiry.
FIIs have remained net buyers in stock futures, which indicate that stock-specific bullishness would likely to be there. Put Call ratio has also been moving up to 1.81, which can be interpreted as an overbought condition in the markets. However, In January 2018, we, saw Put call ratio reaching as high as 1.91.
Considering the technical evidence discussed above, we believe that, the Positional trend of the Nifty is bullish. Holding Nifty with the trailing stop loss would be the right strategy for the short term.
In the present scenario, stop loss can be kept at 11532, while resistances are seen at 11,768 and 11,999.
Here is a list of top three stocks which could give 8-10% return in the next 1 month:
Axis BankLtd: Buy| LTP: Rs 650 | Target: Rs.700 | Stop-Loss: Rs 620 | Return 8%
The stock is on the verge of registering a new all-time high above Rs 655, which was registered in March 2015. The stock price has broken out from symmetrical Triangle on the monthly charts, indicating a continuation of an uptrend.
The stock price has also broken out from the downward sloping trend line, adjoining the previous two monthly tops. There is a breakout from the consolidation, which held for the last 14 quarters.
Volumes have been rising along with the price rise for the last three months. The stock price has been trading above 20, 50, 100 and 200-DMA.
Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of Rs 700 and keeping a stop loss below Rs 620 on a closing basis.
PNB Housing Finance: Buy| LTP: Rs 1412 | Target: Rs. 1550| Stop-Loss: Rs 1330| Return 10%
The stock price has broken out from descending Triangle on the weekly charts, indicating a continuation of an uptrend.
The stock price has also broken out from the bullish flag pattern on the daily charts. There is a breakout from consolidation, which held for the last four weeks.
Volumes have been rising along with the price rise for the last two sessions. The stock price has been trading above 20, 50 and 200-DMA.
Indicators like MACD and ADX have turned bullish on the daily and weekly charts. Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of Rs 1,550 and keep a stop loss placed below Rs 1,330 on a closing basis.
Piramal EnterpriseLtd: Buy| LTP: Rs 3060 | Target: Rs. 3200 | Stop-Loss: Rs 3025| Return 9%
The stock price has registered a new all-time high at Rs 3,075. Previous all-time high was formed at Rs 3070 in June 2017. The stock price has broken out from “Flag” pattern breakout on the monthly chart, which indicates the resume of a primary uptrend.
On Monday, the stock moved up more than 6 percent with a significant jump in volumes. The Nifty Pharma Index is looking extremely strong on the short to medium-term charts.
Indicators like MACD and ADX have turned bullish on the weekly charts. Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of 302 and keeping a stop loss placed below Rs 250 on a closing basis.
MORE WILL UPDATE SOON!!
