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4 technical picks for your portfolio

| 12/5/2011 12:37 PM Monday

The NSE Nifty has seen a perpendicular fall (helped single-handedly by a weak currency). Though technical support levels were made temporarily redundant, a semblance of stability in the rupee has seen the Nifty stage a brilliant rebound from what was a deeply oversold situation. An almost 800-point fall in the Nifty in a matter of five consecutive weeks had the index in a rather precarious situation.

However, a delayed recovery has been underway, and by the looks of it, some more upside seems a distinct possibility. The sustainability of this move remains highly suspect, especially above the 5000 level, making it more of a trading rather than an investment market for the time being. A 50 per cent retracement of the entire fall from an intra-day high of 5399.70 (posted on 28th Oct, 2011) to an intra-day low of 4639.10 (posted on 24th Nov, 2011) comes in at 5020, making it a level to watch out for in terms of resistance.

The Mid-Caps and Small-Caps (remain weaker) have staged recoveries in line with the market. Banks have been market performers, while Capital Goods too have recovered. Consumer Durables have seen a faltering recovery and FMCG has also recovered a tad, while Pharma has been relatively strong. IT has been resilient and Metals have looked up. Realty too, has been a bit better. The Nifty had been on a one way slide, which now seems to have been reversed for the short term. The current move needs to be viewed with some amount of trepidation. It presents itself as a decent trading opportunity by going long.  

TECHNICAL PICKS

OnMobile, CMP - Rs 68.25, Buy
OnMobile bottomed out by posting an intra-week low of Rs 92.60 during the week ended 27th February, 2009, and these levels have rarely been seen since. The scrip launched into an intermediate uptrend to peak at an intra-week high of Rs 249.95 during the week ended 29th May, 2009. The stock couldn’t sustain these levels for long, and declined to post an intra-week low of Rs 199 during the week ended 10th July, 2009. The scrip commenced its uptrend from here, and rallied to peak at an intra-week high of Rs 341 during the week ended 24th July, 2009.

Currently, OnMobile seems set to stage an upmove after a decent weekly consolidation. With even the daily picture looking promising, a further upside from these levels cannot be ruled out.  

Trading Pointers:
Indicators: MACD-Buy    RMI-Buy     Stochastic-Buy       ROC-Buy      RSI-Buy
Support: Rs 58, Rs 53                                                                 
Resistance: Rs 71, Rs 79
Targets: 1st Target: Rs 82 (4-6 weeks)                         
2nd Target: Rs 90 (12-14 weeks)   
BSE Code – 532944                                                                
Stoploss: Rs 61.00 (cls)
55 Week EMA: 98.61


Raymond, CMP - Rs 388.65, Buy
Raymond peaked at an intra-week high of Rs 234.40 during the week ended 25th September, 2009, and declined to post an intra-week low of Rs 175.05 during the week ended 6th November, 2009. The scrip launched into an intermediate uptrend, peaked at an intra-week high of Rs 412 during the week ended 20th August, 2010, only to enter a corrective phase, and declined to post an intra-week low of Rs 351 during the week ended 3rd November, 2010. It staged a rally to peak at an intra-week high of Rs 458.00 during the week ended 29th October, 2010, and entered a corrective phase.

Currently, Raymond has reversed its direction after receiving significant resistance from the Rs 340 level. A weekly close above the Rs 400 level would mean the possibility of a further upside from here.   

Trading Pointers:
Indicators: MACD-Buy       RMI-Buy      Stochastic-Buy     ROC-Buy     RSI-Buy
Support: Rs 340, Rs 309
Resistance: Rs 400, Rs 455
Targets: 1st Target: Rs 438 (4-6 weeks)
2nd Target: Rs 455 (12-14 weeks)   
BSE Code – 500330
Stoploss: Rs 363.00 (cls)  
55 Week EMA: Rs 345.18


Sun Pharma, CMP - Rs 513.10, Buy
Sun Pharma bottomed out by posting an intra-week low of Rs 224.45 during the week ended 11th September, 2009, commenced a short-term uptrend, and rallied to peak at an intra-week high of Rs 369.20 during the week ended 9th April, 2010. The scrip entered a corrective phase to actually bottom out by posting an intra-week low of Rs 303.02 during the week ended 7th May, 2010. It moved sideways before recovering to peak at an intra-week high of Rs 538.45 during the week ended 29th July, 2011, only to decline from here.

Currently, Sun Pharma seems to be on the verge of forming a higher top, higher bottom formation on the weekly chart, indicating the possibility of a further upside from these levels.   

Trading Pointers:
Indicators: MACD-Buy     RMI-Buy       Stochastic-Sell        ROC-Buy     RSI-Buy
Support: Rs 486, Rs 510                                                               
Resistance: Rs 529, Rs 550
Targets: 1st Target: Rs 559 (4-6 weeks)                  
2nd Target: Rs 570 (12-14 weeks)   
BSE Code – 524715                                                               
Stoploss: Rs 490.00 (cls)
55 Week EMA: Rs 460.10


Zee Ent, CMP - Rs 121.45, Buy
Zee Entertainment bottomed out by posting an intra-week low of Rs 44.05 during the week ended 13th March, 2009, took support at the Rs 45 (support) level, recovered smartly, and peaked by posting an intra-week high of Rs 101.75 during the week ended 12th June, 2009. The stock declined from here, struggled a bit, finally overcame its recently-posted high, entered a medium-term uptrend, and appreciated to peak at an intra-week high of Rs 163 during the week ended 23rd July, 2010. Thereafter, the scrip entered a corrective phase.

Currently, Zee Entertainment could be commencing a short-term uptrend. With the oscillators looking positive, a further upside from these levels cannot be ruled out.

Trading Pointers:
Indicators: MACD-Buy       RMI-Buy       Stochastic-Sell     ROC-Buy      RSI-Buy
Support: Rs 121, Rs 110                                                                     
Resistance: Rs 132, 148
Targets: 1st Target: Rs 135 (4-6 weeks)                  
2nd Target: Rs 142 (12-14 weeks)   
BSE Code – 505537                                                                
Stoploss: Rs 114.00 (cls)
55 Week EMA: Rs 125.21

Sebi Disclosure: The author is an active market participant and could not only be having positions but could even be having contrary positions in the stocks mentioned above.  

*LEGEND:
•    EMA – Exponential Moving Average.
•    MACD – Moving Average Convergence Divergence
•    RMI – Relative Momentum Index
•    ROC – Rate of Change
•    RSI – Relative Strength Index

*It would be pertinent to note that these are just tools to arrive at a buy or sell decision. There are no absolutes in this sphere, so the best one can do is to minimise losses and let the profits run.

*In the event of a sharp movement materialising in the scrips recommended - both upwards or downwards (the analysis is done on Monday evening based on the week's price movements while market action can only be taken on Thursday) investors would do well to stay away. Despite an active movement in the scrip, if a need arises to trade - investors can use the support/resistance levels as stoploss and/or entry/exit for taking a position in the market.  In spite of the above-mentioned statement, investors are advised to use their own discretion.

 

Find More Articles on: DSIJ Magazine, Technicals, Stock Recommendations, Technical Tips, Product, Large Cap, Small Cap, Mid Cap

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