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Immediate support for Nifty at around 11,000; ACC among top buys

Immediate support is seen around 11,000 and 10,800 whereas 11,200 will act as a strong hurdle in September expiry, says Abhishek Mondal of Guiness Securities

September 26, 2018 / 11:27 AM IST
 
 
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Abhishek Mondal

The Nifty50 snapped five consecutive sessions of losing streak and ended in green territory as bargain buying seen in some of the blue-chip stocks at lower levels helped the recovery on Tuesday.

The index gained 100 points, or 0.91 percent, to close at 11067.45 but it is still trading below the rising trend line by connecting the swing lows of 9,952, 10,557 and 11,100 which suggests that the short-term trend is still bearish.

After steep correction, we may see some short covering ahead of F&O expiry but overall market will enter into the positive zone only if Nifty closes above 11,207 (38.2 percent retracement levels of August 28 to September 21’s downfall).

On the other hand, support is seen around 10,750 (200-DMA) and 10,638 (61.8 percent of March 23 to August 28 up move).

The Relative Strength Index (RSI) on the daily scale is 37.27 which suggests a neutral reading with no divergence is seen against price and the MACD is continuously trading below the signal line, which indicates supply pressure to persist at higher levels.

The volatility index ended down by 4.27 percent at 16.68 but still trading above its heedful mark of 15, suggests consolidated down move in the market.

On the options front, maximum Call open interest of 28.14 lakh contracts is seen at strike price 11,200, followed by 11,500 which now holds 26.24 lakh contracts and maximum Put open interest of 39.83 lakh contracts is seen at strike price 11,000, followed by 10,800 which now holds 28.78 lakh contracts.

As per the options data, the support and resistance levels for Nifty have shifted lower compared to last week and the immediate support is seen around 11,000 and 10,800 whereas 11,200 will act as a strong hurdle in September expiry.

Here is a list of top three stocks which could give 4-5 perecnt return in next 1 month:

ACC: BUY | Close: 1,563.80 | Target: Rs 1,620 | Stop loss: Rs 1,520 | Return: 4.18 percent

On the daily scale, ACC has taken support around its 50-DMA and bounced back with higher volumes, which suggest that the stock has made a temporary bottom around Rs 1,500 level.

The key technical indicators—Relative strength index (RSI) at 50.69, shows sideways positive momentum and MACD is around zero line.

Based on the above observations, traders can buy the stock on dips around Rs 1,550-1,555 with a stop loss below Rs 1,520 (closing) and a target of Rs 1,620.

HCL Technologies: BUY | Close: 1.116.3 | Target: Rs 1,170 | Stop loss: Rs 1,080 | Return: 4.8 percent

On the daily scale, HCL Technologies has given a breakout from its positive channel pattern above Rs 1,112-1,114 levels on Tuesday with moderate volumes.

The daily Relative strength index (RSI) is in the overbought zone but still shows positive momentum and MACD is above zero line with positive crossover whereas (+)DI is continuously above (-)DI, which indicates limited downside for the stock.

Based on the above observations, traders can buy the stock on dips around Rs 1,105-1,110 with a stop loss below Rs 1,080 (closing) and a target of Rs 1,170.

ICICI Bank: SELL | Close: 311.30 | Target: Rs 295 and Rs 287 | Stop loss: Rs 324 | Return: 5.24 percent

On daily charts, the price is continuously trading below its short and mid-term moving averages as well as below 38.2 percent retracement level of July 16 to August 31, 2018 up move, which indicates that the bias could remain bearish.

The Daily Relative strength index (RSI) is at 38.91, in the neutral zone, no divergence seen against the price and MACD is continuously below the signal line whereas (-)DI is above (+)DI, signaling a bearish trend in the near term.

A trader can sell the current futures contract after some technical bounce-back around Rs 315-317 with a stop loss above Rs 324 (closing basis) for a target of Rs 295 and Rs 287.

Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on Moneycontrol are his own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

Moneycontrol Contributor
Moneycontrol Contributor
first published: Sep 26, 2018 10:58 am

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