Podcast | Stock picks of the day: Nifty has major support between 11,600-11,500

We expect broader markets to outperform benchmarks, therefore one should accumulate quality midcap stocks for medium-term perspective.

The Nifty50 crossed the 12,000-level for the first time ever during the previous week on political stability as the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) forms a government for the second consecutive term.

On the weekly chart, the index has formed a strong bull candle with a higher high and higher low and a bullish gap between (11,407- 11,592) below its base signaling strength and positive bias.

The key point to highlight in the current up move is that subsequent to a golden cross in the Nifty. The Nifty midcap and smallcap indices have also recorded a golden cross indicating a major shift in trend direction.

In the technical parlance, when a medium-term moving average (50-days) crosses above the longer-term moving average (200-days) it is termed as a “Golden Cross”.

Going ahead, we expect broader markets to outperform benchmarks, therefore one should accumulate quality midcap stocks for medium-term perspective

Structurally, an elongated up move along with shallow correction underpinned by broader market participation signifies inherent strength of the market, auguring well for the next leg of the up move towards 12,200 in the coming weeks.

However, bouts of volatility cannot be ruled out in coming sessions owing to May series derivative expiry on Thursday and GDP data on Friday. On the downside, Nifty has major support in the range of 11,600-11,500 levels.

Here is a list of top two stocks which could give 9-17 percent return in the next 1-6 months:

Oberoi Realty: Buy | CMP: Rs 559 | Target: Rs 655 | Stop Loss: Rs 509 | Upside – 17% | Time Frame 6 months

The share price of Oberoi Realty is in a secular uptrend forming a higher peak and higher trough in all time frame.

It has registered a resolute breakout above the falling channel during March 2019 containing the entire price activity of last year.

The stock has been consolidating above the same in the last three months highlighting robust price structure.

During the current month, the stock rebounded from near the breakout area signaling strength and positive price structure.

Among oscillators, the 14-period RSI has generated a bullish crossover thus supports the positive bias in the stock.

We expect the stock to continue its current up move and head towards Rs 655 as it is the price parity of the previous major up move from Rs 440 to Rs 608 as projected from the recent trough of Rs 487.

Union Bank: Buy | CMP: Rs 78 | Target: Rs 85 | Stop Loss: Rs 74 | Upside 9% | Time Frame 14 days

The share price of Union Bank has been consolidating in the broad range of Rs 100-70 for the last 10 months. The entire consolidation is enclosed inside a rising channel signaling formation of higher trough within the consolidation.

The stock during the previous week has rebounded taking support at the lower band of the rising channel. The sharp pullback from the major support signals a reversal of the trend and offers fresh entry opportunity.

The stock has immediate support at Rs 74 levels as it is the 50 percent retracement of the recent up move from Rs 69 to Rs 79.

The daily MACD has generated a bullish crossover above its nine periods average thus supports the positive bias in the stock.

We expect the stock to continue with it's current up move and head towards Rs 85 levels as it is the confluence of the 50 percent retracement of the last two months decline (100 to 69) and the rising 5-day SMA placed at Rs 85 levels.

(The author is Head Technical at ICICI Direct.com Research)

Disclaimer: 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.

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