The market continued to struggle as Nifty extended its losing streak on Thursday. The index closed around the 200-DEMA of 10,750 and is now approaching towards the 10,680 levels which is the rising trendline of the Ascending Triangle pattern on the daily chart.
Going forward, a dead cat bounce cannot be ruled out.
A dead cat bounce is a small, temporary recovery in the price of a declining security or index.
Bank Nifty, on the other hand, outperformed Nifty as the index found support around its 100-DEMA. Our weekly chart analysis indicates that Bank Nifty has also not breached below the previous week’s low of 26,885 which will now act as a crucial support zone. On the upside, 27,300-27,350 is the stiff resistance for the index.
The smallcap 100 index is precariously poised at triple bottom support levels which were seen in October 2018. If the index manages to hold above the 5,670 levels on a closing basis, a meaningful bounce back is likely in the sector.
Following is a list of three stocks that could deliver up to 6-7% returns:
JSW Steel: Buy| Target: Rs 300| Stop Loss: Rs 270| Upside 7%
The stock has been under pressure in the recent past; however, it has finally managed to breakout from an inverse Head and Shoulder pattern on smaller time frame chart which is an early sign of a reversal.
Our monthly chart analysis indicates that the stock has also found support around the 50% retracement level of the entire rally from August 2015 to all-time highs hit in September 2018.
Tata Global Beverages: Buy| Target: Rs 200| Stop Loss: Rs 183| Upside 6.5%
The stock has been consolidating for the past seven trading sessions and has finally broken out from a falling channel pattern on the daily chart.
Positive crossovers on the Relative Strength Index (RSI) indicates that stock has the potential to carry forward the momentum. Every long position should be protected with a stop loss at Rs 183 on a closing basis.
GAIL India Feb Futs: Sell| Target: Rs 290| Stop Loss: Rs 317| Downside 6%
The stock is weak and has also broken down from a Pennant pattern on the weekly chart. Our daily chart analysis also indicates that GAIL has broken down from a Rectangular pattern indicating further downside on the cards. The stock is likely to slip lower towards its potential target of Rs 290 in the near term.
(The author is Sr Technical Analyst, IIFL)
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