October 28, 2016
Technical Stock Picks - Diwali Special
Near Term View
NIFTY (CMP: 8638)
Neutral
Weekly Chart
Source: Falcon
Rationale:
Our benchmark index took a u-turn on the ‘Union Budget Day’ after posting a low of 6869. Since then, we have witnessed a
relentless upward rally without any meaningful correction. Now, after six-months of spectacular up move, the index chose to take a
breather after nearing its all time highs. Technically speaking, the index has slipped into a consolidation mode with a medium term
perspective. The broad range for the Nifty would be seen as 9000 - 8500. We expect some consolidation to continue before
confirming any directional move.
There could be two scenarios that one needs to understand, firstly the bullish scenario in which the Nifty manages to hold the 8500
mark and then surpasses the recent high of 8968.70 after a small consolidation. In this scenario, we may see new highs in the near
term. However, the other scenario that we are betting on would be a breach of 8500, followed by a corrective move towards 8200
- 8150 before breaking the recent high. This, we believe would form a strong base for the next upward leg of the rally to witness
new highs for the market. Traders should keep a note of these scenarios and it is to be noted that the corrective move is a healthy
development in the longer run. Thus, one can keep accumulating value buying propositions in case of a corrective phase.
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Technical Stock Picks - Diwali Special
Near Term View
Nifty Bank (CMP: 19556)
Neutral
Weekly Chart
Source: Falcon
Rationale:
In-line with our benchmark index (Nifty), the Nifty Bank index too gave a sharp reversal after registering a low around 13407 in the
month of February 2016. The index then rallied with a formation of ‘Higher Top Higher Bottom’ structure on daily as well as weekly
charts. However, this ferocious run came to an end in the early part of September 2016 as the index posted a new 52-week high of
20576 and then witnessed some decent profit booking. Of late, the volatility in banking index has increased tremendously and as a
result of this, after completing its recent corrective move upto 18821, the index managed to retrace back 61.8% of the down move
in a very short span of time.
Now, if we meticulously observe the weekly charts, the ‘Higher Top Higher Bottom’ structure is still intact, which signifies the
uptrend. However, some of the technical indicators are challenging this price structure. First, the ‘Parabolic SAR’ on weekly chart,
which has turned into a ‘Sell’ mode and the ‘RSI Smoothened’ oscillator, which has already confirmed a ‘Negative Crossover’ in the
overbought zone. All these observations are indicating that the Nifty Bank index may consolidate in broad range of 19000 - 20350
in the near term. Analyzing the short term and the broader trend, the index is expected to trade with higher volatility rather than a
directional move and hence, there is high probability of the index correcting towards the lower end of the mentioned range any
time in the near term. Investors with a medium to long term perspective should look to buy into the index and its components only
on dips near to the lower end of the range. A breach of recent low of 18820 would then lead to a deeper retracement and thus,
traders should adhere to proper risk management with stop loss placed below mentioned support.
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Technical Stock Picks - Diwali Special
Recommendation
(CMP: `1488)
Lupin
BUY
Weekly Chart
Source: Falcon
Rationale:
During last few weeks, the stock has consolidated above the weekly ‘SuperTrend’ indicator.
The mentioned support coincides with the 78.6% retracement of the previous upmove from `1389 to `1750.
Post consolidation near the support, prices have started moving higher with ‘Impulsive’ upmove seen on lower
time frame chart.
The ‘Parabolic SAR’ indicator on daily charts has turned into ‘BUY’ mode.
The ‘RSI Smoothened’ oscillator on daily charts has given a positive crossover post retracing to the oversold
zone.
Considering the above technical evidences, we advice traders to buy this stock at current levels and on
declines to `1470 for a target of `1720 in coming 3 months. The stop loss for this trade set up can be kept at
`1380.
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Technical Stock Picks - Diwali Special
Recommendation
M&M (CMP: `1312)
BUY
Weekly Chart
Source: Falcon
Rationale:
Post the upmove from `1082.30 to `1508.95, the stock has seen a decent correction of around 13 percent in
last two months.
Currently, the stock is hovering around the 50% retracement levels of the mentioned rally, which coincide with
the ’89 EMA’ on weekly chart.
We are observing formation of couple of Bullish Harmonic patterns, viz. ‘Bullish AB=CD Pattern’ and ‘Bullish
Bat Pattern’ on the daily chart. The Potential Reversal Zone (PRZ) of both the patterns are placed around
`1305 and `1280 levels respectively.
The ‘RSI’ oscillator is rebounding from the oversold territory at 25 - 30 levels, which has been a good support
zone in the past.
Considering the above technical evidences, we are expecting reversal on the counter. Thus, we advice traders
to buy this stock in range of `1315 to `1290 for a target of `1506 in coming 3 months. The stop loss for this
trade set up can be kept at `1194.
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Technical Stock Picks - Diwali Special
Recommendation
Engineers India (CMP: `269)
BUY
Weekly Chart
Source: Falcon
Rationale:
The longer time frame charts indicates completion of ‘wave 2’ in the stock near the low of `140 registered in
the month of February 2016; and the prices currently seem to be trading in ‘wave 3’ of an ‘Impulsive’
upmove.
On the daily as well as weekly charts, prices have been forming ‘Higher Top Higher Bottom’ structure and the
stock is thus in an uptrend.
The recent upmove has also been supported with higher volumes which is a positive sign.
The ‘RSI Smoothened’ oscillator on daily and weekly charts is indicating continuation of the positive
momentum.
Considering the above technical evidences, we advice traders to buy this stock in range of `272 to `264 for a
target of `325 in coming 3 months. The stop loss for this trade set up can be kept at `244.
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Technical Stock Picks - Diwali Special
Recommendation
Adani Ports (CMP: `307)
Buy on Dips
Weekly Chart
Source: Falcon
Rationale:
The stock had formed a ‘Double Bottom’ pattern and had given a breakout from the same in second week of
August.
After the sharp rally from `169.70 to `279.70, the stock has started correcting and had consolidated around
the ‘neckline’ of the above mentioned pattern, which coincides with ’89 EMA’ on both daily and weekly
charts.
The sideways movement of ten weeks has resulted into formation of a ‘Bullish Flag’ pattern on weekly chart.
Last week, the stock had given breakout from the ‘Flag’ pattern with healthy volumes.
Since, the ‘RSI - smoothened’ oscillator is placed positively on weekly chart, we are expecting a healthy up
move in the counter.
Considering the above technical evidences, we advice traders to buy this stock in the range of `290 to `300
for a target of `365 in coming 3 - 4 months. The stop loss for this trade set up can be kept at `267.
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Technical Stock Picks - Diwali Special
Recommendation
NMDC (CMP: `131)
BUY
Monthly Chart
Source: Falcon
Rationale:
This stock has underperformed significantly during the 20 months period of July 2014 - February 2016.
However, since last month and a half, we are witnessing some early signs of a trend reversal.
On weekly chart, the stock has been maintaining its uptrend by forming ‘Higher Highs Higher Lows’ on a
consistent basis.
The higher degree (monthly) chart now looks extremely encouraging as the stock prices have confirmed
strength by surpassing the ‘Super Trend’ indicator along with the rising ‘RSI’ values.
Most importantly, the stock is now of late soaring on substantial higher volume participation.
Traders can initiate a long position in a range of `131 to `127 for a target of `162 in next 3 months. A stop
loss can be placed at `113.
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Technical Stock Picks - Diwali Special
Recommendation
NCC (CMP: `93.5)
BUY
Weekly Chart
Source: Falcon
Rationale:
Of late, we saw the ‘Nifty Midcap’ index soaring to new all-time high; however, this stock failed to match up
with the momentum of the index. Since last one month, we have been observing few positive developments
on the chart.
Firstly, the convincing breakout from the ‘Horizontal Line’ resistance of `89 during the last week has
confirmed a medium term up trend.
On the volumes front, the overall activity has been exceedingly well in the recent past; adding conviction to
the upward breakout of the prices.
Now, one of the key evidences is the placement of the ‘RSI-Smoothened’ on monthly chart which seems to be
in the process of penetrating the 70 mark in the northward direction. Thus, we expect the stock to witness a
catch up rally with the index in the near to medium term perspective.
Considering the above technical evidences, we advice traders to buy this stock in range of `95 to `90 for a
target of `118 in next 3 months. The stop loss for this trade set up can be kept at `81.
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Technical Stock Picks - Diwali Special
Recommendation
Lovable (CMP: `300)
Buy on Dips
Weekly Chart
Source: Falcon
Rationale:
We have been witnessing a long consolidation of nearly 15 months in a broad range of `290 - `230. Due to
last couple of days surge, the stock prices have managed to breakout in the upward direction to confirm a
strong reversal.
The volume activity during this price action has picked up substantially; providing credence to the breakout.
Now, as per the ‘Change of Polarity’ rule, earlier resistance zone of `290 - `285 would now act as a strong
support for the stock.
Thus, looking at the rising ‘RSI’ values, any dip in stock prices can be construed as a buying opportunity.
Since, risk to reward ratio at current is not so favorable, we would advise traders to initiate a long position on
a decline towards `295 - `290 for a target of `348 in next 3 months. A stop loss can be placed at `268.
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Technical Stock Picks - Diwali Special
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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