By Pushkaraj Sham Kanitkar
The Nifty on Tuesday remained sideways and remained within the high of 9,218 and low of 9,060 corresponding to last week.
The level of 9,060 is significant because if the index slips towards this level it will enter the GAP area which was created from close of 8,934 on 10th March 2017 to open of 9,092 on 14th March 2017.
While the market has remained within this ambit, there is a marked case of profit booking at higher levels, which has given rise to rotational movement within the index constituents especially the heavyweights.
We maintain a cautious approach from here on as a welcome correction is not ruled out. But, the stock specific action is likely to continue.
Here is a list of top five stocks which are looking attractive based on technical parameters:
Tata Steel: BUY| Target Rs 530-575| Stop Loss Rs 460-465
The charts are showing a rational uptrend in the last 12 months, with intermediate bouts of profit booking. The stock is trading above all its long term moving averages like 50, 100 & 200-day moving averages too, remaining in a rational uptrend as well as positively aligned.
In the latest leg, the prices corrected from around Rs 500 to a level of around Rs 463, and after consolidation moved higher on pretty big delivered volume back to Rs 500. In the process, a good amount of Put writing was seen at lower levels around the Rs 480-490 mark creating a good setup for an up move.
We feel prices would create space till around Rs 530 followed by a take at the 2-year high of around the Rs 575 mark. On the lower side, the recent swing low of around Rs 460-465 will prove to be a good demand zone.
Hindalco Industries: BUY| Target Rs 225| Stop Loss Rs 175
The scrip has been in a rational uptrend for some time now which led to the formation of higher top and higher bottoms right since February 2016.
In fact, the latest leg has seen Hindalco creating fresh 52-week highs at Rs 202 just last week. Once again the consolidation seems to be pretty strong with exponential delivered volumes being around twice the averages.
“We feel there could be a case of a sustained uptrend that could test the levels of around Rs 225 with an extension to all-time highs of Rs 248-250 created in the year 2011,” said Kanitkar. The stops can be placed around Rs 175 on a closing basis, a bit below the intermediate bottom of Rs 178 created in February 2017.
L&T: BUY| Target Rs 1,615
The charts are showing a series of higher top and higher bottom formations since December 2016, after a sustained correction of 6 months spanning a move from around Rs 1,615 to Rs 1,300.
The current leg sprang up in the form of a gap up from Rs 1,491 on 10th March to Rs 1,517 on 14th March. This move has sustained very well after almost a month’s consolidation between Rs 1,446 and Rs 1,515.
This would in a way open the gates to the 52 weeks high at Rs 1,615 followed by the distribution phase of 2014 around the Rs 1,750-1,800 mark.
Axis Bank: SELL| Target Rs 476| Stop Loss Rs 515
Although the news doing the rounds of a possible merger with Kotak Mahindra Bank seems to have supported the prices for around 2 months, the undertone seems to have remained predominantly bearish.
It happens to be one of the very few stocks to be still trading below the long-term 200-DMA (Daily Moving Average). In fact, the recent move was cut short just near this resistance level of around Rs 525 mark.
The prices are back to their weak self and any rise from here on should be an opportunity to add to shorts or exit existing holdings. The downsides till recent swing low at Rs 476 followed by the previous swing low of Rs 442 would open up.
A stop may be placed a bit above the current 200-DMA placed at Rs 515 on a weekly closing basis.
ICICI Bank: SELL| Target Rs 250| Stop Loss Rs 285
Similar to Axis Bank, the scrip has remained an outright laggard although it governs more than 25 per cent weightage in the BANKNIFTY. While the scrip trades down by 10 per cent from its 52 weeks high, the benchmark BANKNIFTY is within 2 per cent of its 52-week high.
A relative underperformer, ICICI Bank stands within a percent of its swing low of Rs 269. There is a strong chance of prices breaking below the levels and even going down to test the 200-DMA placed at Rs 262.
A sustained weakness may plummet is down to the 250-245 mark. It would be opportune maintain stops around the 285 mark on a closing basis.
(The author is AVP – Technical Research at GEPL Capital. Views and recommendations given in this section are his own and do not represent those of Chillicious.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)