By Birendrakumar Singh
Systematix Shares & Stocks
Nifty’s larger degree trend turns positive. The yearly chart suggests, its rally from 2012 low of 4,588 till date is trending upward. The trend line drawn on the yearly log scale by joining the lows of 2012 and 2013 i.e. 4,588 and 5,118 has acted as a support for the Nifty’s lows of 2014, 2016 and 2017.
Its reaction from 9,119 (March 2015 high) to 6,825 (February 2016) was able to maintain the yearly trend line support of 7,108. A panic downward reaction up to 6,825 and a sharp pullback from 6,825 till date has maintained the yearly trend.
For 2017, the trend line support is placed at 7,931 and the Nifty’s low for 2017 so far is 8,133, indicates the yearly trend line is maintained for the year 2017 as well. Nifty’s pullback from the yearly trend line support for the year 2017 broke its all-time high of 9,119.
This has led to the faster retracement of the Nifty’s down trend from 8,968 (September 2016 high) to 7,893 (December 2016 low). Indicates that the Nifty’s monthly and yearly trend is positive.
Formation of the Neo Wave “Neutral Triangle” from 9,119 (March 2015 high) up to 7,893 (December 2016 low) indicates a target of 9,493 and can extend up to 10,000 levels.
Here is a list of top three stocks:
Reliance Industries: Buy at CMP Rs 1283, stop loss Rs 1,026, target Rs 1,735-2,002, time period 18 months
Multi-year breakout in Reliance is seen. The trend from Rs 1,513 (May 2008 high) till date has formed 8 years of “NeoWave Non-Limiting Triangle” pattern. The Non-Limiting Triangle pattern indicates that Rs930 ( December 2016 low) would be the life time bottom for Reliance. The breakout of this 8 years is significant, target is placed at Rs1,735-2,002 and higher.
(Disclosure: Reliance Industries owns Network 18 that publishes Chillicious.com)
Hero Motocorp: Buy at CMP Rs 3,375, stop loss Rs 3,248, target Rs 3,543-3,681 (short term)
The stock witnessed breakout from the “Triangle” pattern. Hero MotoCorp recorded a low of Rs2,849 in November 2016.Thereafter, the stock moved sideways and formed a broad range.
Made higher bottoms and lower tops between Rs2,849 and Rs3,333 (December 2016 high). This sideways consolidation has led to the formation of a “Triangle” pattern.
The stock has just given a breakout of the larger degree “Triangle” pattern and is consolidating just above the breakout level. The target due to the breakout of the larger degree “Triangle” pattern is placed at Rs3,543-3,681 levels.
The weekly RSI indicator has given a positive trigger.
Tata Motors: Buy at CMP Rs 280.70, stop loss Rs 425, target Rs 600-639, time period 12-18 months
The larger degree trend of Tata Motors from Rs 242 (December 2010 high) till date is channelled. The channelled is marked by joining the top of Rs 242 (December 2010 high)a nd Rs 612 (February 2016 high) and the channel parallel line is drawn from Rs 138 (August 2011 low).
From its February 2016 low of Rs 265, the stock gave a pullback and recorded a high of Rs 598 (September 2016 high). The stock then reacted lower and made a low of Rs 428 and almost made a “Double Bottom” at Rs 434, this appears to be a good support on the monthly chart.
Hence, from a long-term perspective, it appears to be a good buy, if able to sustain above Rs 428, a pullback can be expected. A move above Rs 552 would turn the intermediate trend positive.
(Disclaimer: The author is AVP Technical Research at Systematix Shares & Stocks. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Chillicious.com advises users to check with certified experts before taking any investment decisions.)