Technical indicators suggest that Nifty continues to trade below critical resistance levels. All up-moves, if any, should not be chased blindly unless Nifty moves past its critical resistance zone at 11,120-11,200. Here are four stocks that could prove good trading plays this week:
(Report by: Gemstone Equity Research & Advisory Services)
BIOCON | Buy above Rs 232 | Target Price: Rs 265
The stock marked its high near 358 and a subsequent lower high near 340 in early 2019. Since then, the stock is under corrective decline. It has attempted to mark its bottom near the 211-mark and appears to be in the process of trying a reversal. The weekly MACD has shown a positive crossover; it is now bullish and trades above its signal line. The weekly RSI has shown consistent bullish divergence over the past couple of weeks as the stock made lower lows, but RSI did not do so while the price took support at 200-Week MA repeatedly. The daily MACD remains in continuing buy mode while the daily RSI stays neutral. Any close below 216 will be a stop-loss for this trade.
The stock has relatively underperformed the general markets over the past couple of months, and it has remained under a secular decline. A couple of signs appear which points towards some bottom in place and likelihood of the price inching higher over the coming days. RSI remains neutral on the daily charts and is seen marking higher bottoms. On the weekly chart, the RSI shows a bullish divergence against the price. PPO has turned positive, and the weekly MACD is currently in buy mode. The Bollinger bands are over 60% narrower than usual and show increased possibility of the price making a sharp move. The stock remains in the improving quadrant on the RRG when benchmarked against the FMCG Index. Any close below 280 should be treated as a stop-loss for this trade.
BEL | Buy above Rs 108 | Target Price: Rs 123
The stock has been strongly outperforming the broader markets, and this is reflected in the RS Line which is steadily moving higher. The stock shows the probability of a strong breakout after it moves past the 115 levels. While the stock is yet to make a breakout, the OBV—On Balance Volume has already marked a fresh high which is bullish. The daily MACD stays in continuing buy mode; the weekly PPO has just turned positive. The weekly MACD has shown a positive crossover, and it is now bullish while trading above the signal line. Any close below 100 should be treated as a stop-loss for this trade.
After remaining in a small congestion zone formed between the price levels of 388-420, the stock has shown multiple signs which point towards likely resumption of an up move. The daily MACD has shown a positive crossover, and it is now bullish while trading above its signal line. The RSI has marked a fresh 14-period high which is bullish; it is also seen breaking out of a formation while marking a bullish divergence against the price. While the price remained in the corrective mode over the recent past, the OBV—On Balance Volume did not decline, which shows resilience of the stock. The RS line has just crossed the 50-DMA which shows potential beginning of outperformance of this stock against the broader markets. Any close below 400 should be treated as a stop-loss for this trade.
HEDGED OPTION CALL
The options data as of Friday Close for the September 13, 2019 expiry shows that the highest Call and the Put OI has built up on the same strike price of 11000. This level is likely to be the pivotal level for the rest of the days until expiry.
(IMPORTANT: The Option Prices shown are as of Friday’s Close. The Pay-off Chart, Maximum Loss and Maximum Profit Potential can vary as per the actual execution price)
Disclosure under Clause 19 of SEBI (Research Analysts) Regulations 2014: Analyst, Family Members or his Associates holds no financial interest below 1% or higher than 1% and has not received any compensation from the Companies discussed.