Stocks in the news: ICICI Bank, TCS, Blue Dart, Titan, Tata Steel, Borosil Glass Works, Goa Carbon
Fall of the Bharatiya Janata Party’s (BJP) three-day-old government in Karnataka over the weekend might not go down well with investors even though the market was factoring in a disappointment since Tuesday when election results signalled a hung assembly in Karnataka.
After the fall of the BJP government, HD Kumaraswamy, who is heading the Congress-Janata Dal (Secular) coalition, is set to become Chief Minister for the second time on May 23.
The Nifty corrected nearly two percent for the week-ended May 18 and slipped below its crucial support placed at 10,600, suggesting further pain in the coming session.
Experts advise investors to stay with quality stocks. “Any kneejerk reaction will be short-lived because failure of the BJP to form the government will not impact the prospects of the National Democratic Alliance in the 2019 general elections.”
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, shares the same school of thought. “From now on, till elections in Madhya Pradesh, Rajasthan and Chhattisgarh later this year, economics will dictate the direction of the market than politics. Of immediate concern to the market will be impact of crude at $80 per barrel on inflation, interest rates, exchange rate and GDP growth rate.”
Last week, the Nifty topped out at 10,900 which it recorded on Tuesday. The sell-off continued throughout the remaining part of last week to eventually conclude with a sharp cut of nearly two percent from the previous week’s close.
Technically speaking, this is a classic example of how certain Fibonacci ratios prove their worth. This time it was the 78.6% Fibonacci retracement (10,900) of the previous down move, which acted as a sturdy wall on the election verdict day (Tuesday).
“The price action on Tuesday resulted in the formation of a Gravestone Doji candlesticck, which is showing its negative implication now. In course of this action, the index has broken and closed below its previous week’s low for the first time in the last seven weeks,” Sameet Chavan, Chief Analyst - Technicals and Derivatives at Angel Broking, told Moneycontrol.
He stated that the short-term top has now been formed at 10,929.20. “The tide has once again turned lower and hence, any bounce towards 10,650–10,700 is likely to get sold into.” Going forward, he expects continuation of this corrective move at least towards 10,536–10,440 levels.
Here is a list of top 10 stocks that could return up to 11% in the June series:
Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
Britannia Industries: Buy| Target: Rs6,100| Stop loss: Rs 5,300| Return 9%
This counter appears to have witnessed a consolidation breakout from its 4-week range bound move only to register a new lifetime high.
As it is moving in a well-defined ascending channel with multiple touch points for last 15 months, post this breakout, it can easily head towards the upper end of the said channel whose value is placed around Rs 6,100 levels.
Hence, positional traders should buy into this counter with a stop below Rs 5,300 and a target of Rs 6,100.
Yes Bank: Buy| Target Rs 377| Stop loss Rs 337| Return 9.2%
This counter appears to have made a bottom around Rs 340 levels after the recent correction, as it is moving in a narrow range of Rs 350-340 levels for the last 9 trading sessions.
Sooner than later a breakout can be witnessed from this range which can then propel this counter towards its lifetime highs of Rs 383 registered in September 2017.
Hence, positional traders are advised to buy into this counter for an initial target of Rs 377 with a stop below Rs 337.
HUL: Buy| Target: Rs 1,690| Stop loss: Rs 1,555| Return 5%
This counter appears to be in a strong uptrend as it is consistently hitting new highs. Hence, traders can make use of this momentum to go long for a target of Rs 1,690 and a stop below Rs 1,555.
Analyst: Sameet Chavan, Chief Analyst, Technicals, and Derivatives at Angel Broking
Bajaj Finserv Ltd: Buy| Target: Rs 5,980| Stop loss: Rs 5,450| Return 4%
This counter has been enjoying its multi-year bull run since the last four years. There has been no major correction seen in this course of action, which is quite remarkable.
On Thursday, the stock once again managed to confirm a breakout from its seven months congestion zone. It is accompanied by a substantial rise in volumes, indicating strong buying interest at all-time highs as well.
We recommend buying on a minor dip towards Rs 5,650 for a near-term target of Rs 5,980. Traders can keep their stop losses at Rs 5,450.
Vedanta Ltd: Sell| Target: Rs 259| Stop loss: Rs 281| Return 4%
We remained quite skeptical in the recent rally seen in the entire ‘metal’ space. But, now once again, individual stocks within this pocket started correcting and considering their broader structure, further pain in the near-term cannot be ruled out.
‘Vedanta’ looks weak and offers a better risk to reward ratio as compared to its peers. The stock violated the ‘Upward Sloping Trend Line’ support placed at Rs 275 on a closing basis which indicates further weakness going forward.
Hence, one can look to go short around Rs 274 for a target of Rs 259 by following a strict stop loss placed above Rs 281.
Canara Bank: Sell| Target: Rs 226| Stop loss: Rs 250| Return 8%
Of late, there has been a consolidation seen around its retracement level of Rs 250. The stock prices vacillated around it for nearly three weeks and now, due to last weeks’ correction, we can witness a breakdown from this crucial near-term supports.
In technical terms, we can call it as a confirmation of the ‘Inverted Flag’ pattern and this structure now projects a target of Rs 226 in the next few days. One can look to go short at Rs 240 for a target of Rs. 226 by following a strict stop loss placed above Rs 250.
Analyst: Pushkaraj Sham Kanitkar, AVP - Technical Research at GEPL Capital
TCS Ltd: Buy| Target: Rs 3,900| Stop loss: Rs 3250| Return potential 11%
TCS witnessed a breakout in the calendar year 2018 but started consolidating between 2,750-3,250 levels in the month of May.
There is the absorption of heavy volumes during this period (including the stake sale by the promoters). TCS formed and witnessed a breakout from the Cup & Handle pattern above Rs 3,300.
A breakout from the pattern projects a pattern completion targets around Rs 3,850-3,900 with just one condition that it should trade above Rs 3,250.
Kotak Mahindra Bank: Buy| Target: Rs 1360| Return potential 5%
A breakout from a 6-month consolidation occurred in the second week of April as prices climbed above the all-time high placed at Rs 1,110. A breakout from the consolidation spaced between levels of Rs 950-1,110 projects to extrapolated targets around the Rs 1,360 mark.
The consolidation was accompanied by a good rise in “delivered quantity”, which is an indication of genuine long-term buying in the scrip.
IndusInd Bank: Buy| Target: Rs 2,100| Return potential 8%
The stock is in a rational uptrend that started with a move above the 200-DMA placed at Rs 1,750. This move gathered further strength when the stock moved above the parallel channel placed at Rs 1,800 levels. This up move projects targets placed around Rs 2,100 levels.
Analyst: Vikas Jain, Sr. Research Analyst, Reliance Securities Ltd.
Biocon Ltd: Buy| CMP: Rs 650| Target: Rs 700| Stop loss: Rs 620| Return 7%
The stock has retraced 55 percent of the prior up-move (from Rs561 to Rs678), where its medium-term moving average worked as a key reversal point. The key technical indicators are in the bullish mode, signaling strength in the stock.
We believe that the stock will keep moving higher and will soon record new high, where it will face hurdle around prior high connecting rising trend line.
On the lower side, its medium-term moving average will continue to save the stock from falling. Thus, a long position can be initiated here for the target of Rs700 with a stop loss below Rs620.
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