Top six trading picks in rallying market: Analysts

MUMBAI: The Indian markets have resumed uptrend led by gains in healthcare, capital goods, metals and banks. According to analysts, the benchmarks are moving higher on more reform measures and the next leg of upmove is likely to continue after some consolidation near current levels.

Shardul Kulkarni, Senior Technical Analyst, Angel Broking

1) Pantaloon Retail:

The price movement for the last 4 – 6 trading sessions suggest a possibility of some correction or consolidation after a huge rally from its recent bottom of Rs 133-227. On the hourly chart, the stock has broken down from its multiple support zone around Rs 204. In addition, the daily ‘RSI-Smoothened’ oscillator is now signaling a negative crossover.

Considering these technical evidences, we are of the opinion that the stock may slide towards its’20-day EMA’ of Rs 192. This level also coincides with the 38.2 per cent Fibonacci Retracement level of the rise from Rs 133 to Rs 227.

Hence, we advise traders to sell the stock in a range of Rs 202 - 208 for a target of Rs 192 in coming 3 – 5 trading sessions.

2) Reliance Communications:

It was quite evident for the stock to slip into a consolidation mode after a steep rally of nearly 15 – 20 per cent from its recent bottom of Rs 46.55. At present, the prices are moving in a narrow trading band of Rs 66 - 60.60. A sharp intraday rally and a positive closing on Monday’s session, indicate that the stock has a decent support around Rs 60, which also coincides with the ’20-day EMA.

We are now observing that, if the prices move above Rs 65 with substantial volumes, then it may lead to a breakout from a ‘Downward Sloping Trend Line’ drawn by joining Rs 72 (High on July 11, 2012) and Rs 65.80 (High on September 27, 2012). Hence, we advise buying the stock only above Rs 65 for a target of Rs 71 in coming 1 – 2 weeks.

Arun Mewawalla, AVP Technicals & Derivatives, Quantum Securities

3) Bharti Airtel:

The stock gained yesterday with rise in the Open Interest and the volumes suggest formation of long build up. Technciallly, Stochastic is positive while MACD is seen trending upwards suggesting positive bias.

Buy the stock with stoploss of Rs 263 for a target of Rs 291.

4) Bank Nifty:

It has fallen along with a fall in the Open Interest and lower volumes are suggesting long unwinding. Technically, Stochastic and MACD have turned negative and confirm short term downtrend.

Sell Bank Nifty with stop loss of 11600 for target of 11072.

IIFL:

5) Tata Steel:

Tata Steel on the daily has been flirting near the neckline of inverted H&S pattern and with appearance of shooting star pattern trend reversal remains on cards.

However, the bearish shooting star pattern would have positive impact if prices manage to open higher above Rs 410. The long term falling resistance line for the stock is placed at Rs 430 which could be tested in the near term.

Buy the stock above Rs 410 with a stoploss of Rs 402.50 for a target of Rs 425 in next 7 days.

6) Cadila Healthcare:

The stock had been moving in a downward channel between the range of Rs 908 and Rs 820 on decent volumes. We believe that the three week channel has matured and given a way to an upside breakout. In last two trading sessions, the stock has taken support at its 100-DMA, confirming the bullish set up. The daily RSI is suggesting strength in the upmove

Buy above Rs 841 with stoploss of Rs 825 for a target of Rs 875.

Disclaimer:

The above report is based on technical views and information given by analysts. Please consult your financial advisor before taking any position in the stocks mentioned.