Friday, 23 February 2018

Nifty at a make-or-break point; top 3 stocks which could give up to 12% return

The current scenario is a make or breaks one for the Nifty as if the index cracks below the 10275 mark on a closing basis it would lead to a larger structural breakdown on the daily chart.

 INDIAN STOCK MARKET TIPSThe Nifty50 went through wild moves in last hour of trades in an otherwise subdued F&O expiry day on Thursday. The Nifty just managed to hold above the important 10300-10275 support area.

It is not only above the February 6, 2018, lows but also corroborates with the rising trendline support zone. The current scenario is a make or breaks one for the Nifty as if the index cracks below the 10275 mark on a closing basis it would lead to a larger structural breakdown on the daily chart.

In fact, a Head and Shoulder pattern breakdown is on the cards for Nifty. However, giving some hope to the bulls, Nifty holding above the mentioned support area could aid the market to stage a meaningful recovery from current levels.

The Bank Nifty, on the other hand, has already broken down from its Head and Shoulder pattern on the daily chart. However, the index is just managing to hold above its immediate previous low of 24800 hit in early December which still gives a ray of hope for a meaningful recovery.

If the index slips below 24800, Bank Nifty is expected to further crack sharply. One should consider being cautiously optimistic at the current juncture.

Here is a list of stocks that deliver up to 8-12% returns:

Apollo Hospital Ltd: BUY| Target Rs1397| Stop Loss Rs1176| Returns 12%

The stock has been on a declining trend since hitting its all-time high of Rs1532 in March 2016. However, in the last seven months, we have observed Apollo Hospital forming an inverse Head and Shoulder pattern on the weekly chats which is considered as a bullish pattern.

Finally, this week the stock broke above the neckline of the pattern which is a bullish sign. The price outburst has been accompanied by a healthy rise in traded volumes.

In addition to that, the relative strength index or the RSI also indicates that the current momentum is likely to extend further. Traders can look at buying the stock for a target of 1397 and a stop loss placed below 1176 levels.

Mindtree Ltd: BUY| Target Rs810| Stop Loss Rs811| Returns 9.5%

After consolidating for the past four weeks, MindTree has broken out from a Symmetrical Triangle pattern on the daily chart.

Every time, the stock corrected from highs, 21-DMA proved to act as a strong support zone. The volumes to have picked up sharply surpassing the 10-days average volumes.

In addition, we saw positive crossovers on multiple oscillators which is a positive sign. We expect the stock to rally higher towards its all-time high levels of Rs 810 in the medium term.

Biocon Ltd: BUY| Target Rs671| Stop Loss Rs597| Returns 8%

The stock has been trading in a very solid higher top higher bottom structure and has also been a stand out outperformer compared to the other pharma stocks.

The recent consolidation has been a healthy move and the stock has finally broken out from a declining channel pattern on the daily chart.

With volumes backing the current breakout, we expect the stock to rally higher towards its potential target of Rs671 translating into 8 percent upside in the medium term.

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.

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