October 19: Stocks to watch

With the huge quantity of funds flowing into the Indian Markets and the index near it's highs, not everyone is ready to trade the index as the comfort level is low and the risk very high. It is from these levels that NIFTY has seen sharp falls for the past 5 years. It is a good time to be stock specific now and look for trades in midcaps, just like we had done Adani, JP Associates, Sintex, Just Dial, Tata Coffee to name a few. Ofcourse, we had bad trades in Tata Chemicals and Andhra Bank, the risk-reward ratio is really good at this time and hence profitability is high.

Nifty Midcap View:
Since bottoming out in early September, the Midcap index has risen by 1000+ points and many midcap stocks have given returns of 40%-50% in just one month! (Example: GMR Infra.) The index currently is around 7340-50 levels and has immediate support at 7250. 
CNX Midcap
As the above chart shows, the index has stiff resistance at 7500-7570 levels which is the 50% retracement mark and also the falling trendline resistance. If the index manages to break the 7600 levels and close, it will give moves of another 700-1000 points. However, the index still is in a severe bear market and if we see a larger image of the index since 2008, midcaps have badly eroded in values. The index by far continues to under-perform the broader market. A bull market is one, where in the mid-size companies of the economy are in a boom which the current scenario doesn't show. The 7000 mark if broken now will indicate a break of trend and once 6600 is broken, we expect levels below 6000 in the time to come. However, depending on policies and election results, the view has to keep changing. As of now, the index is enjoying a great inflow of funds and many midcaps are giving some great trading opportunities.

The stock is seeing a period of consolidation in the 790-820 range. Any break above the 830 levels can see the stock going upto 890-900 levels. SL can be put at 810 for the same. The stock can see fast moves once it breaks above 845 levels.

On the daily charts, HDFC Bank is forming an inverse Head and Shoulder pattern. A break above 680 can see the stock rallying to 730 levels. 660 can be used as a SL for the same. Head and Shoulders are powerful breaks and an inverse H&S signifies a bottom, but in this case, the stock is in a rally and H&S might be just a break above the falling trendline at 680.

HDIL is a must have stock on the watchlist.
  • It is a very volatile stock
  • It has a high beta
  • It gives very quick moves
HDIL breaking above 44 opens the targets of 47-50-52 for the stock, with support at 41, one can look for 10%-20% returns on the stock. 

IDFC is in a consolidating triangle and we already have positions at around 95 levels for 98 levels. Once 98 breaks, we expect 102 and if 102 breaks then much higher levels. The support for the stock is at 93 and breaks above 98 and 102 can give big moves in this stock.

BUY NTPC above 150 for targets of 160+ with SL at 145 for closing basis.

BUY IOB on a break above 51, add more on dips near 50 with SL at 48.75 for 56+ levels 

This is a trade which on the long run always gives good returns! Identify stocks in strong uptrends, wait for a correction till the 13DMA and BUY near it and hold. BUY PVR with SL at 474 levels for upside till 560 and even higher.
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