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Mid & Smallcaps playing catch up; 3 stocks that could give 7-12% return: Hadrien Mendonca

Mumbai | December 21 2018 09 : 30 IST | Moneycontrol

The mid and the small-cap space is playing catch up to the heavyweights. It is advisable to have a mix of both in your trading portfolio.

Santa Claus rally on the street!

As markets extended winning streak to the second consecutive week. The Nifty50 has resumed its higher high and higher low cycle. The index created a higher low of 10,333 on December 11, 2018, and has also surpassed its immediate previous peak of 10,940 forming a higher high.

The Nifty has also re-entered a rising channel pattern which indicates 11,150-11,200 would act as a strong resistance which is the higher end of the entire rising channel pattern.

On the other hand, a breach of the 27,100 barriers has lifted the Bank Nifty further. The immediate resistance being the 27,600-27,800 zone.

Going forward, every long position should be protected with a stop loss around the 27,000 support zone. The mid and the small-cap space is playing catch up to the heavyweights. It is advisable to have a mix of both in your trading portfolio.

Here is a list of stocks that could deliver up to 7-12% returns in the next 1 month:

DCB Bank: Buy| LTP: Rs 167| Target: Rs 180| Stop Loss: Rs 162| Returns 7%

The stock has been on a declining mode for the past six quarters and has finally broken out from an inverse head and shoulder pattern on the weekly chart.

Apart from this, it has also breached the falling channel pattern surpassing its long-term 200-DEMA. DCB Bank has also formed a higher low on the weekly chart. We expect the stock to move higher towards its potential target of Rs180 in the medium-term.

Gruh Finance Ltd: Buy| LTP: Rs 316.80| Target: Rs 355| Stop Loss: Rs 299.5| Returns 12%

The stock has been in a lower top and lower bottom structure for the past seven months and has finally broken out from the Symmetrical Triangle pattern on the weekly chart.

The price outburst has been accompanied by a smart uptick in traded volumes. Gruh has not only surpassed its long-term 200-DEMA but has also sustained above the same which further accentuates our bullish stance on the stock.

Hero MotoCorp: Buy| LTP: Rs 3,361| Target: Rs 3,650| Stop Loss Rs 3,215, Returns 8.6%

This index heavyweight stock has shown immense strength for the past two months and in the process has broken out from a Pennant pattern indicating a fast move on the cards in the near term.

Our weekly chart analysis indicates Hero Motocorp has also surpassed its 100-WEMA barrier and also closed above the same. The relative strength index also indicates that the current momentum is likely to get extended.

The author is a Senior Technical Analyst, IIFL.

 

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