After the bounce back in morning trade on July 30, market resumed its downtrend that accentuated in the last hour of trade. The Nifty closed near the lows of the day at 11,085, down 0.93 percent.
Broader market indices underperformed the benchmark, as BSE Midcap and Smallcap were down 1.58 percent and 2.13 percent, respectively . Market breadth on NSE was dismal, with more than four stock declining for every rise.
The index formed long-body bearish candlestick. It broke long term 200- day moving average and closed below it. Also, the index broke below May 14 swing low of 11,108. Now next support for the market is seen at 11,000-10,950 levels. Breaking below this, the next level is at 10,800. On the upside 11,260-11,310 is the resistance zone, trading below which needs to be taken for sustainable bounce back.
In Nifty options, maximum open interest for Put is seen at strike price 11,000 followed by 11,200; while for Call maximum open interest is seen at 11,3000 followed by 11,500.
India VIX increased by 4.2 percent to close at 13.6 level for the day. VIX has seeing bounce back from 19-month lows, suggesting further rise in VIX which is possible from current levels leading increase in volatility in market.
Here are the top stock trading ideas which can give good returns:
Infosys: Buy | CMP: Rs 793 | Stop loss: Rs 770 | Target: Rs 860 | Return: 8 percent
The stock witnessed consolidation between Rs 775 and Rs 700 odd levels over a five-month period at its all-time high levels. In mid-July, the stock saw gap up opening and closed above sideways range. Thus, giving fresh breakout to touch all-time high of Rs 804 and indicating resumption of uptrend.
For the last couple of weeks, the stock has been trading in a narrow range and consolidating its gains post its rally from low of Rs 706. It has formed pole and flag pattern which is a bullish continuation pattern on daily chart. MACD line has given positive crossover, with its average above neutral level of zero on weekly chart.
The Average Directional Index (ADX) line, indicator of uptrend strength, has moved above equilibrium level of 20 with rising Plus Directional line on weekly chart.
Thus, the stock can be bought at current level and on dips to Rs 785, with stop loss below Rs 770 for target of Rs 860 levels.
Berger Paints: Buy | CMP: Rs 332 | Stop loss: Rs 318 | Target: Rs 375 | Return: 13 percent
The stock is in long term uptrend, forming higher tops and higher bottoms on weekly chart. It hit all-time high of Rs 350 in August 2018 and went into consolidation mode.
The stock has formed symmetrical pattern on weekly chart. Last couple of rallies from rising support trend line have witnessed strong momentum and high volumes, indicating buying participation suggesting stock is likely to see breakout on upside.
MACD line has moved above neutral level of zero on daily chart. Thus, the stock can be bought at current levels and on dips to Rs 327, with stop loss below Rs 318 for target of Rs 375 levels.
ICICI Prudential Life Insurance: Buy | CMP: Rs 398 | Stop loss: Rs 380 | Target: Rs 450 | Return: 13 percent
The stock hit all-time high of Rs 509 in July 2018 and then declined to touch a low of Rs 277 in February 2019. Since then, it has rallied back to current levels. It has crossed falling resistance trendline connecting highs of Rs 509 and Rs 462 on weekly chart, indicating decline is over and stock has resumed its uptrend.
On the daily time frame, it has formed bullish ascending triangle pattern and trading below breakout level of Rs 405. MACD line has given positive crossover, with its average above neutral level of zero on daily chart.
ICICI Prudential can be bought at current levels and on dips to Rs 391, with stop loss below Rs 380 for target of Rs 450 levels.
Dabur India: Buy | CMP: Rs 423 | Stop loss: Rs 405 | Target: Rs 480 | Return: 13 percent
After hitting all-time high of Rs 490 in August 2018, the stock declined to Rs 360 levels. It has seen bounce back from strong support level of Rs 360 level where multiple lows and previous highs are seen, thus, indicating as value area for stock.
The price has moved above long-term 200-day moving average and trading above it. After breakout above Rs 415 levels, the stock has been consolidating between Rs 435 and Rs 415 odd levels for the last couple of weeks.
MACD line has moved above neutral level of zero on weekly chart. Thus, the stock can be bought at current levels and on dips to Rs 418, with stop loss below Rs 405 for target of Rs 480 levels.
Union Bank of India: Sell | CMP: Rs 67 | Stop loss: Rs 70 | Target: Rs 58 | Return: 15 percent
For the last eight months, the stock was consolidating between Rs 68 and Rs 100 odd levels. It formed multiple lows at Rs 68 and witnessed bounce back. On July 30, the stock fell to close below the support level with long body bearish candlestick.
MACD line has given negative crossover, with its average below equilibrium level of zero on weekly chart. The ADX line is moving up from equilibrium level of 20, with rising Minus Directional Index on daily chart.
Thus, the stock can be sold at current levels and on rise to Rs 68, with stop loss above Rs 70 for target of Rs 58 levels.
The author is Head of Technical and Derivatives at Sanctum Wealth Management
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