The Nifty turned volatile after the Karnataka election verdict as investors turned cautious when results showed BJP falling short of the majority mark. However, derivative data reflects a positive build up as there is still a lot of short positions in the Nifty and index calls.
Among Nifty Call options, the 11,000 strike call has the highest open interest with more than 64 lakh shares, while in put options, 10,500 strike hold the maximum open interest with over 65 lakh shares.
On technical grounds, the Nifty spot has major support in the 10,700-10,750 range. At present, the Nifty is moving up with decent additions in open interest, which indicates strength in the current trend.
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Option writers were active as put writing was seen in 10,700 and 10,800 strikes along with unwinding in calls. As per current derivative data, Nifty can move towards the 10,900-10,950 mark as the market undertone remains bullish with the support of consistent long build up and short covering.
Here is a list of top three stocks that could offer up to 13% return in the short-term:
Hindustan Oil Exploration Company Limited: Buy| Target Rs 152| Stop loss: Rs 125| Return 12%
After taking support at its 200-day exponential moving average, the stock recovered back above its short-term moving averages and has been trading in a rising channel on the daily charts.
However, from the last five weeks, the consolidation has also been witnessed in prices as a stock swing in a narrow range of Rs 120-130.
We witnessed fresh momentum in prices this week as the stock has given a consolidation breakout above Rs 130 levels along with marginally higher volumes. Traders can accumulate the stock in a range of Rs 135-137 levels for the target of Rs 152 and a stop loss below Rs 125.
IFB Industries Limited: Buy| Target: Rs 1,530| Stop loss: Rs 1,250| Return 13%
After consolidating in a narrow range of Rs 1,150-1,250 for more than six weeks, the stock has given a breakout above its key resistance level and has once again surpassed its short and long-term moving averages on the daily interval charts.
At the current juncture, the stock has formed a bullish flag pattern on the daily charts and also managed to give a breakout above the same.
The additional volumes with rising price can trigger the next up move in prices moving forward. Traders can accumulate the stock in a range of Rs 1,350-1,380 for the upside target of Rs 1,530 and a stop loss below Rs 1,250.
Thermax Limited: Buy| Target: Rs1,300| Stop loss: Rs 1,080| Return 12%
After shaping a double top formation on the weekly charts, the stock witnessed profit booking and retraced back towards its 50-days exponential moving average.
The positive divergence in the secondary indicators like Rsi and stochastic also support the next up move going forward. Traders can accumulate the stock in a range of Rs 1,160-1,170 levels for the upside target of Rs 1,300 and a stop loss below Rs 1,080.
Disclaimer: The author is Senior Research Analyst, SMC Global Securities Ltd. The views and investment tips expressed by investment experts on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.