Nifty likely to expire 10300-10500 range; 4 stocks which could give up to 18% return

The index is trading in the tight range of 10270 on the downside and 10640 on the higher side, in the last ten sessions. We expect this tight range to continue until we see a strong breakout or breakdown on either side.

By Rohit Singre
Bonanza Portfolio Ltd.

The Nifty index closed the day at 10397.45 with a gain of 37 points on Wednesday after trading in a flat range for the whole day and formed a ‘Hammer’ candle pattern on the daily chart which stands for reversal.

The index is trading in the tight range of 10270 on the downside and 10640 on the higher side, in the last ten sessions. We expect this tight range to continue until we see a strong breakout or breakdown on either side.

On the options front, highest open interest is placed at 10300 PE followed by at 10,000 PE so the immediate support is placed at 10300 and on the higher side 10500 CE which will act as strong resistance.

The derivative data suggest that February month expiry is expected in 10300-10500 range. In the recent past, we have witnessed long unwinding along with short built up in the Nifty which suggests that bears are having control at the moment.

We expect volatility to extend further and one needs to trade with strict stop losses as it is bought on the dip and sell on the rise market at least in the near term.

Currently, the index has strong resistance placed at 10640. Traders can initiate shorts on every rise and investors can keep a stop loss above 10640. The immediate support is formed near 10270 so these level can be used as buying opportunity.

Here is a list of four stocks which can give up to 18% return in short term:

Cholamandalam Investment: BUY | Target Rs 1520| Stop Loss 1290| Return 10%

The stock is trading in a strong uptrend and it looks like the stock did not participate in the recent correction that suggests that the stock will extend its uptrend in the near-term.

In the recent correction, the stock has taken support from previous Cup and Handle breakut and bounced sharply in the presence of good volumes.

On the weekly chart, the stock is trading in a rising channel pattern forming the higher top and higher bottom formation.

The momentum indicator RSI is currently hovering near 60 which is bullish zone. Considering technical setup, one can initiate buy call on the stock at current levels to any dip near 1350 for the target of 1520 and a stop loss below 1290 on a closing basis.

MCX: BUY | Target Rs 840-900| Stop Loss 690| Return 18%

MCX is the underperforming stock and we have seen a substantial downside in the counter since Oct 2016.

The stock is trying to bounce from its strong support and the previous bottom level which was formed around Rs720 zone. We have witnessed a reversal candlestick pattern on the daily and weekly chart. On the monthly chart, the stock is hovering near its strong retracement support of 61.8% from the all-time low of Rs240 zone.

Traders can initiate a long call on the stock at current levels to any dip near 740 for the target of 840 and 900. A stop loss should be kept below 690 on a closing basis.

Can Fin Homes: BUY | Target Rs 580 | Stop Loss Rs 470| Upside 12%

After a strong rally, the stock showed a healthy correction and took a halt at 61.8% retracement support from the previous low of 251. The recent rise from 61.8% retracement zone is likely to extend further because we have seen substantial volume activity on the chart.

On the daily and weekly charts, we have witnessed a strong positive divergence. A rise in price along with the rise in volume suggests that the stock has formed a near-term bottom and can move towards Rs580 levels.

The momentum traders can take a position in the counter at current levels to any dip near Rs490 for the target of Rs580. A stop out level can be kept below 470 on a closing basis.

Narayana Hrudayalaya: BUY | Target Rs 344 | Stop Loss Rs 280 | Upside 11%

The stock was trading in a falling channel pattern forming lower lows and lower highs but recently it has given a strong breakout above the falling channel with decent volume hinting that the stock is ready to move high from current levels.

The stock has also formed positive divergence on the daily and weekly chart. On the daily chart, the stock has given a double bottom breakout with good volume that suggests it is going to change its overall downtrend to an uptrend.
Traders can initiate a long call on the stock at current levels to any dip near 305 for the target of 344. A stop loss can be kept below 280 on a closing basis.


Disclaimer:-The views and investment tips expressed by investment experts are their own. Ripples Advisory advises users to check with certified experts before taking any investment decisions.

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