Upward momentum in Sensex likely to continue; top five trading strategies

MUMBAI: The Sensex ended the previous week on a flat note as the foreign inflows tapered in the truncated week. A sharp rally on the last trading day of the week indicates that the upward momentum is likely to continue till the elections results are out on May 16.

Expect a rangebound market with positive bias in coming week with stock specific action as companies announce quarterly results.

Following are the top five trading strategies for the week by Ashish Chaturmohta, Head – Technical & Derivatives Research, Fortune Equity Brokers that can give good returns to traders.

Tata Global: The stock had seen a sharp rally from Rs 142 levels to Rs 156 at the end of month of March. Since then, the stock had been trading sideways between Rs 156 and Rs 148 levels for past couple of weeks forming bullish flag pattern formation on daily chart.

On Thursday, it gave a breakout from the pattern with strong momentum. Volumes being almost double the ten day average volumes, indicating strong buying participation in the stock. Momentum indicators are in buy mode indicating strength in the counter.

Buy the stock with a stoploss of Rs 152 for target of Rs 170

State Bank of India: On the weekly chart, the stock has formed bullish double bottom formation at Rs 1,450 levels and given breakout above its neckline level of Rs 1,924.

This indicates long term change in trend of the stock from sideways to up. Recently it registered a high of Rs 2,040 and then retraced back to its breakout level and has taken support from there.

Sustaining at current levels we can expect the stock to rally towards 2100 levels in the short term. Momentum indicators are in buy mode indicating strength in the counter.

Buy the stock with a stoploss of Rs 1,980 for target of Rs 2,100

ITC: After the recent rally from Rs 310 levels to Rs 365, the stock has corrected down to Rs 336 levels where multiple support levels are seen. The 50 per cent retracement of the rise comes at Rs 338 levels.

Also, the lower Bollinger band and 50-day exponential moving average is seen at this level. The stock has given bounce back from here indicating resumption of uptrend.

The stock has given breakout above the short term resistance of Rs 350 with momentum indicating buying interest in the stock. Expect the stock to retest its recent pivot high of Rs 365 levels.

Buy the stock with stoploss of Rs 347 for target of Rs 365

NIIT Tech: The stock has corrected from high of Rs 480 to low Rs 390 levels where basing formation around 38.2 per cent retracement level of the upswing from Rs 240 to Rs 480 levels is seen.

The 89-day exponential moving average is also seen at the same level providing support to the stock. Daily RSI is also holding above 40 levels which is lower end of the bullish range, indicating up trend is still intact.

Momentum oscillators have given positive crossover indicating momentum is picking up in the stock. However break below Rs 390 levels will be negative for the stock.
Buy the stock on dips around Rs 400 with stoploss of Rs 390 for target of Rs 446

Torrent Power: The stock has given a strong breakout above its falling trendline resistance which is seen around Rs 88 levels with heavy volumes. Sustaining at current levels we may see further buying participation in the stock to continue towards Rs 125-130 levels in short-term.

However, looking at its broad based pattern, sustaining above Rs 130, can test Rs 150-155 levels on the upside. On the downside, Rs 98 would act as an important support, below which the current view may be negated.

Buy the stock with a stoploss of Rs 100 for target of Rs 125

(Disclaimer: The opinions expressed by the analyst are his own and not of www.economictimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.)