'Breakdown below 10,700 may trigger short-term bearishness in the market'

Rupak De

Bonanza Portfolio

The headline index continued to move in a range as it failed to give any significant breakout on either side. In its recent move, the Nifty failed to sustain above 61.8 percent of the previous fall from 11,760 to 10,004 that is placed at 11,085.

The failure to conquer the said level induced retracement in the market. The daily RSI (14) is in bearish crossover and falling with a current reading of 46.19.

On the options front, maximum open interest position is visible in 11,000 CE (41.08 lakh shares) and 10,400 PE (31.93 lakh shares), followed by 11,200CE (29.50 lakh shares) and 10,700 PE (28.91 lakh shares).

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Going forward, 10,700 is expected to act as crucial support for the Nifty, and any fall towards 10,700 may get bought.

Decisive trades above 11,100 may induce a rally towards 11,200. On the other hand, a breakdown below 10,700 may trigger short-term bearishness in the market.

Here are three stocks that could give 7-10 percent return in next 1 month:

Motherson Sumi Systems: Buy| LTP: Rs 132.95 | Target: Rs 147| Stop loss Rs 127 | Upside: 10 percent

The stock has given highest closing in the last three days that suggests a waning bearishness in the stock. In addition, a positive divergence is visible on the daily RSI(14) that indicates possibility of a positive shift in the price momentum.

Moreover, RSI(14) is seen to have moved out of the oversold zone. Traders can accumulate the stock in the range of Rs 132-134 for the target of Rs 147 with a stop loss below Rs 127.

UPL: Buy| LTP: Rs 814.50 | Target: Rs 860| Stop loss: Rs 794| Upside: 5.5 percent

The stock price has given a rectangle pattern breakout on the daily chart that suggests the stock has cleared its consolidation pattern on the back of increased interest.

Daily MACD saw a bullish crossover and reading above its "line of polarity". Weekly RSI(14) also recorded a bullish crossover and rising. Traders can accumulate the stock in the range of Rs 810-820 for the target of Rs 860 and a stop loss below Rs 794.

Reliance Industries: Sell| LTP: Rs 1,238.70 | Target: Rs 1,150| Stop loss: Rs 1,276| Downside: 7.1 percent

The stock, on the daily chart, has given a rising wedge pattern breakdown that suggests a bearish reversal of the previous trend.

The index formed a double top formation on the daily chart of the stock. In addition, daily RSI(14) is in a negative divergence that suggests a possibility of a bearish shift in the price momentum.

Traders can sell the stock in the range of Rs 1,230-1,240 for the target of Rs 1,150 and a stop loss above Rs 1,276.

The author is a Technical Research Analyst at Bonanza Portfolio Ltd.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

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. First Published on Feb 14, 2019 09:38 am