The markets witnessed a sustained selling pressure throughout the trading day on Monday after opening but managed to hold above 10,300 levels. The recovery seen in the last hour of trade saw the Nifty regain half the losses and closed at 10,378, down by 0.7 percent for the day.
Top 5 stocks to buy in a volatile market which can give up to 15% return on short-term
The index has formed a Bearish Belt hold type of candlestick pattern as opening and intraday were the same. After the last seven days of sideways price action, the index is showing signs of breakdown and resumption of downtrend with new closing low for the decline starting from its all-time high.
The index closed below the rising support trendline originating from September 2017 low of 9,688 level. Also, the Nifty closed below 100-day moving which has been acting as support for the index.
The index is seeing supply pressure above 10,600 levels and is unable to sustain it. If Nifty sustains below 10,400 levels, the index is likely to see a continuation of the downtrend.
The next level for the index is seen at 10,170, and then at 10070 where 200-day moving average and November-December lows are seen. In Nifty options, strike price 10,400 calls witnessed a significant amount of open interest addition suggesting call writing activity.
Thus, the index immediate resistance is placed at 10,400-10,450 levels. For strength, the index should cross and sustain above 10650 levels on the tradable basis.
Here is a list of top 5 stocks which could give up to 15% return:
V-Guard Industries: BUY | CMP: Rs 234 | Stop loss: Rs 222| Target: Rs 270 | Return 15%
The stock is in long-term uptrend forming the higher top and higher bottom formation on its weekly chart. Last month, the stock hit an all-time high of Rs 250 on good volumes and price, and then corrected down to Rs 202 levels on below-average volumes; indicating market participants are holding on to the stock despite the decline.
The correction has taken support at 61.8 percent Fibonacci retracement of the rally from Rs 177 to Rs 250 levels. Also, the low coincides with a 200-day moving average indicates a strong support level and the stock has seen a strong bounce back from the previous level.
In the last four sessions stock has witnessed above average volumes and has moved higher – indicating buying participation in the stock, even in the current market scenario. Thus, the stock can be bought at current levels and on a dip to Rs 230 with a stop loss below Rs 222 for a target of Rs 270 levels.
United Breweries Limited: BUY | CMP: Rs 1,052| Stop loss: Rs 1,000 | Target: Rs 1,200 | Return 14%
The stock had touched a high of Rs 1,226 in April 2015 and then declined down to Rs 700 levels where it witnessed consolidation at lower levels and rallied back to Rs 1,200 levels.
The stock has been trading below Rs 1,200 levels and consolidating its gains for the last three months between Rs 1,200 and Rs 1,000 levels. In the process, the stock has formed a bullish cup and handle pattern on long-term charts.
Price has taken support at Rs 1,000 level i.e. lower end of the range and seen a bounce back. It has formed bullish engulfing candlestick pattern on the daily chart and closed above the previous day’s range.
The relative strength index (RSI) and Stochastic have given positive crossover with their averages suggesting reversal of short-term trend. Thus, the stock can be bought at current levels and on a dip to Rs 1,300 with a stop loss below Rs 1,000 for a target of Rs 1,200 levels.
InterGlobe Aviation Limited: BUY | CMP: Rs 1,282 | Stop loss: Rs 1,220 | Target: Rs 1,450 | Return 13%
The stock touched high of Rs 1,347 in August 2017 and then corrected down to Rs 1,022 levels. Since then the stock has been forming a higher low and closed above 78.2 percent after retracement of the fall.
Price has been consistently taking support at 200-day moving average and is moving higher – indicating that the long-term trend in the stock is up. For the last few months, the stock has been largely consolidating and now is closed at a six month high.
In the last seven sessions, the stock has consistently seen above average volumes with positive price action that indicates to a buying participation at even higher levels. ADX line, an indicator of trend strength has moved above neutral level reaffirming the strength in an uptrend.
Thus, the stock can be bought at current levels and on a dip to Rs 1,260 with a stop loss below Rs 1,220 for a target of Rs 1,450 levels.
Repco Home Finance Limited: SELL | CMP: Rs 537| Stop loss: Rs 560 | Target: Rs 480 | Return 11%
The stock has been in a decline mode for the last eight months. Last month’s pullback in the stock was unable to sustain above its 200-day moving average and price has continued to hit 52-week low confirming the downtrend.,
Last week, the stock witnessed a decline in high volume with follow-through price action yesterday. It has broken its pivotal low of Rs 549 and closed below. Thus, the stock can be sold at current levels and rising to Rs 545 with a stop loss of Rs 560 for a target of Rs 480 levels.
Power Finance Corporation: SELL | CMP: Rs 107 | Stop loss: Rs 112 | Target Rs 95 | Return 11%
The stock has seen a downtrend for last nine months and continues to hit new 52-week low. Recently, the stock price fell below 61.8 percent retracement level of the major up move from Rs 78 to Rs 169 levels which comes at Rs 113 levels.
Since then the price has been trading at lower levels for the last couple of weeks. Thus, the stock can be sold at the current level and on rising to Rs 109 with a stop loss of Rs 111 for a target of Rs 95.