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Sunday, May 12, 2013

Top five momentum trading picks for next week


The Nifty rallied for the fourth straight week and hit a two-year high of 6,111 led by inflows from foreign institutional investors on expectations of improving macro-economic environment.
The Nifty ended at 6,107.25, up 12.50 points or 0.21 per cent. It touched a high of 6,114.55 and a low of 6,084.15 in trade today.
The S&P BSE Sensex ended at 20,122.32, up 39.70 points or 0.20 per cent. It touched a high of 20,146.83 and a low of 20,055.18. The S&P BSE Midcap Index was up 0.31 per cent and the S&P BSE Smallcap Index gained 0.33 per cent.
"For the week, Nifty has formed a long white candlestick closing at its high. This is the fourth straight week of gains. Momentum is still strong on daily chart but intraday we are seeing negative divergence appearing. But as long price keeps making new highs trend remains up and remain long in the market," said Ashish Chaturmohta, Head- Technical & Derivatives Research, Fortune Equity Brokers.
"Index has closed below the Jan high i.e. 6,110 levels. The rally hasn't seen break of any lows during its uptrend; hence 6025 level needs to watched on Nifty. If this is broken then we can look for a decline down to 5,930-5,900 levels," he added.
He recommends top five momentum picks that can give good returns next week:
Glenmark
The company made a high in December 12 and then went into slow decline till March. The rise in the stock in last two months has lead to a formation of rounding pattern on the chart. Last week, it closed at 52-week high with a long range white candlestick. Most of rise which came in the last couple of weeks recovered the whole of decline.
Bollinger bands on weekly chart have seen expansion with price closing outside the upper band. Weekly ADX is indicating that the trend is catching strength on the upside. Daily MACD has moved above zero level into positive territory. Expect the stock to continue its rally in the near term. Buy the stock at current levels of Rs 541 with stop below Rs 525 for a target of Rs 600 odd levels.
Jindal Steel
The stock has been in a strong downtrend since the start of this year. The bounce back in stock was low in comparison to the rest of the market. It has turned down from first resistance tend line and has also been unable to sustain above short term 21-day exponential moving average. It is back again near its 52-week low.
Daily DI lines have again seen crossover with negative line starting to move higher. With the weekly indicators and daily indicators grounded in bearish mode, trend is firmly down. Look to sell the stock at current levels and rise to Rs 320 with stoploss above Rs 323 for a target of Rs 285 levels.

Tata Motors
The stock has seen nice rally with higher high and higher low formation since it hit its low in April. It recorded its highest weekly closing since January. Currently it is trading below resistance of Rs 312 levels. On weekly chart stock has formed a long ranged white candlestick showing strong buying action.
On daily chart RSI has crossed 60 levels indicating change in range to bullish. MACD is in bullish zone above zero level on daily chart and on weekly is turning up after taking support from zero line. Daily +DI line is on verge of picking up strength above 25 levels. Buy the stock above Rs 312 levels with stop below Rs 305 for a target of Rs 330 levels.
Dr Reddy's Laboratories
The price made a double bottom on daily chart in March'13 and has rallied since then. The stock saw a correction in April and which consolidated above the previous minor swing high. It then rallied and consolidated again in last couple of weeks. More importantly it consolidated above its previous lifetime high. Volumes have also been in sync with prices.
On Friday, the volume picked up along with price closing strongly. Daily RSI is firmly above the 60 levels and the price is above short term 21 EMA. This looks like a fresh start of rally and expect higher levels. Buy the stock at current levels at Rs 2,022 levels and dips with stoploss below Rs 1,990 for a target of Rs 2,110 and then Rs 2,150 levels.
Coal India
After a making low at around Rs 290 levels in April, the stock rallied back to record a high at Rs 324 levels. This was the first major resistance level from where faced turn around in price. Daily RSI also saw reversal from 60 levels which shows it is still in bearish range. MACD lines have shown negative crossover and dipped below the zero horizontal level. DI line has crossed above 25 levels showing strength in downtrend.
Last weekly as well, daily candlestick was a long ranged black candlestick formation, which shows selling pressure in the stock. Sell the stock at current levels and on rise to Rs 305 with stop above Rs 308 for a target of Rs 280 on the downside.
(The views and recommendations expressed in this section are the analysts' own and do not represent those of EconomicTimes.com)

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