Monday, November 4, 2019

Hot stocks: Stay put as Nifty is headed towards 12,300 levels

Hot stocks: Stay put as Nifty is headed towards 12,300 levels

The Nifty is now placed above all important moving average parameters, indicating bullish trend on all timeframes

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The Nifty has been rising for the last seven sessions. Last week, it registered its second-highest weekly close. Metals, PSU banks, IT and midcaps have started outperforming the index.

The Sensex recently hit a fresh high, while the Nifty is just 1.3 percent away from taking out it previous high of 12,103 registered on June 3.

By crossing 11,700, the Nifty broke out from the bullish 'Cup and Handle' pattern on the daily charts. It is now headed for 12,300 levels.

The index has also been moving in the upward sloping channel on the weekly charts, the upper band of which projects the next resistance around 12,300 levels. The earlier resistance of 11,700 has now become a strong support for the Nifty and longs should be protected with a stop-loss at the same level.

The Nifty is now placed above all important moving average parameters, indicating bullish trend on all timeframes.

From an accumulation phase, the markets have entered the participation phase and the overall breadth of the market is likely to improve further from here on.

The Nifty Midcap index has surpassed its 200-DMA with a 'Rounding Bottom' formation on the daily charts. We expect midcaps to outperform the Nifty and Sensex in November.

Indicators and oscillators like MACD, ADX and RSI have also been in the favour of the bulls on the daily and weekly charts.

The strategy should be to remain long on the Nifty. We expect a target of 12,300 in November, but there could be a small pause at 12,000 levels in the short term as healthy call writing is seen at that strike, but corrections should be bought into.

Here is a list of top three stocks that could return 13-16 percent in the next three-to-four weeks:

Tata Metaliks: Buy| LTP: Rs 607| Targets: Rs 685| Stop-Loss: Rs 552| Return 13%

The primary trend of the stock has been bullish on the monthly charts. The stock has seen a correction of more than 50 percent from the all-time high of Rs 962, registered in January 2018.

The stock price has broken out from the downward sloping channel on the weekly charts. “Flag” pattern breakout has been observed on the daily charts with a rise in volumes.

Considering the technical evidence discussed above, we recommend buying the stock at the current market price for the targets of Rs 685, and keep a stop loss at Rs 552 on a closing basis.

Godfrey Phillip: Buy| LTP: Rs 1,103| Target: Rs 1,260| Stop-Loss: Rs 950| Upside 14%

The stock price has given a symmetrical triangle breakout on the daily charts. The 50-days EMA has recently crossed above its 200-Days EMA, resulting into golden crossover.

The stock has resumed its primary uptrend after short term consolidation. The resumption of an uptrend has been with higher volumes, which adds strength in the trend.

Considering the technical evidence discussed above, we recommend buying the stock at the current market price for the target of Rs 1,260, and keep a stop loss at Rs 950 on a closing basis.

Navin Flourine: Buy| LTP: Rs 891| Target: Rs 1,040 | Stop-Loss: Rs 712 | Upside 16%

The stock price has recently broken out from a long term rectangle pattern on the monthly charts, which also resulted in a breakout from the last 8 quarter’s price consolidation between 570 and 843.

The stock price has recently registered a new all-time high above Rs 864. For the week ended 25th Oct 2019, the stock registered its highest weekly close with a significant jump in volumes.

The stock price has been trading above all important moving averages which indicate bullish trend for all time frames.

Considering the technical evidence discussed above, we recommend buying the stock at CMP, for the target of Rs 1040, and keep a stop loss at Rs 712 on a closing basis.