Hadrien MendoncaIIFL
Despite registering the biggest fall in approximately four months, the benchmark indices closed at a fresh lifetime high (on Thursday) once again extending the pre-Budget rally further.
The strong move could be attributed to the government’s decision to cut extra borrowing by 60 percent to Rs 20,000 crore from Rs 50,000 crore, apart from that global cues and media reports of the government proposing for a 100 percent FDI in banking sector also supported the sentiment.
Coming back to current moves, major underperformance was seen among the midcaps while the advance-decline ratio deteriorated sharply in favour of the bears on Thursday.
The Bank Nifty toppled sharply in the late trades amid weekly F&O expiry. The long build up was seen in the morning trades in the Bank Nifty but the late sell-off seems to have wiped out all intra-day gains.
Going forward, Nifty has crucial support zone around the 10,750 levels. PSU banks were the weakest link as they contributed highest to the sharp fall while Private Banks held partial gains ending in the green.
The private bank constituents like HDFC Bank, Kotak Bank, and IndusInd Bank were among the top gainers. Crucial support for the Nifty Bank index is around the 26340 levels.
Here is a list of two stocks which could give up to 8% return in the short term:
ITC: Target Rs296| Stop Loss Rs263| Returns 8%
The stock has shown a renewed momentum after going through a bout of selling pressure in the previous week. In fact, the upswing has aided ITC to breakout from a rising channel kind of a pattern on the daily chart.
In addition, the stock has also entered into a fresh higher top higher bottom structure. The FMCG heavyweight has also closed above its long-term 200-DMA for the second time in two weeks which further accentuates our bullish stance on the stock. We expect ITC to rally towards it potential target of Rs 296 in the medium term.
Colgate Palmolive Ltd: Target Rs1254| Stop Loss Rs1208| Returns 8%
Colpal Palmolive has been in a strong uptrend with the 13-DEMA acting as a solid support every time the stock declines. What’s more intriguing is that the stock is on the verge of breaking out from an Ascending Scallop kind of a pattern on the weekly charts. The breakout would be confirmed once price manages to close above Rs 1156 on weekly basis.
In anticipation of the breakout, we expect the stock would make an attempt to move higher towards its potential target of Rs 1254 levels which translates into ~8% from the current market price.
Disclaimer: The author is Senior Technical Analyst, IIFL. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
