The S&P BSE Sensex rallied over 100 points while the Nifty50 rose above its 200-days moving average (DMA) in morning trade on Thursday after the Federal Open Market Committee on expected lines hiked rates by 0.25 percent to take the upper range from 1.50 percent to 1.75 percent at the conclusion of the two days meeting.
“The Fed even is neutral to positive for the markets for the following reasons. a) relief that only two hikes are expected this year, and b) surprisingly the inflation number has not been revised upwards,” VK Sharma, Head PCG and Capital Market Strategy at HDFC Securities told Moneycontrol.
“The Fed kept its inflation forecast for the next two years the same even though it sees a stronger economy and falling unemployment rate. The central bank predicted inflation, as measured by its preferred PCE gauge, would average 1.9 percent in 2018 and 2 percent in 2019,” he said.
For Indian markets, in particular, the near-term implications of the Fed policy are less hawkish than what the markets had penciled in, and the current rate hike will not pressurize the RBI to hike rates.
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Analyst: Rohit Singre, Senior Research Analyst, Bonanza Portfolio Ltd.
Mahindra & Mahindra Ltd: BUY | Target: Rs 820 | Stop loss: Rs 719| Return 10%
The stock has given a falling trendline breakout on the weekly chart, which suggests a reversal of the previous downtrend. In addition, the breakout was retested and the price has moved up subsequently, which shows the resilience of the trend line.
On the daily chart, a “golden cross” of moving averages is visible which shall support the positive trend in price. Traders can accumulate the stock in the range of Rs 740-750 for the target of Rs 820 with a stop loss below Rs 719.
Larsen & Tubro Ltd: BUY | Target: Rs 1450| Stop loss: Rs 1277| Return 11%
The stock has been trading within a rising channel since early 2016 which signifies a long-term uptrend for the stock. Moreover, the stock price has been trading near the lower band of the rising channel on the weekly chart, which suggests that the price has reached near the support line.
In addition, 50-DMA and 200-DMA are in a positive crossover which is known as golden cross.
Traders can accumulate the stock in the range of Rs 1300-1310 for the target of Rs 1450 with a stop loss below Rs 1277.
BEML Ltd: BUY | Target:Rs 1350| Stop loss: Rs 1039| Return 22%
On the daily chart, the stock has moved above its previous two sessions’ high backed by strong volume indicating growing optimism in the counter.
In addition, lower wick on the weekly chart indicates buying at the lower level. A positive divergence is visible in the daily RSI (14) as the indicator has not responded to the price when the later went for a new low in its latest move.
Traders can accumulate the stock in the range of Rs 1090-1100 for the target of Rs 1350 with a stop loss below Rs 1039
Dewan Housing Finance: BUY | Target Rs 582 | Stop loss: Rs 499 | Return 12%
On the daily chart, the stock has moved above previous four sessions’ high backed by strong volume indicating growing optimism in the counter.
On the weekly chart, a bullish harami is visible which may propel the price for a rally in the days to come. Moreover, a momentum indicator, RSI (14) is in bullish crossover and rising on the daily chart. Traders can accumulate the stock in the range of Rs 515-520 for the target of Rs 582 with a stop loss below Rs 499.
Maruti Suzuki India Ltd: BUY | Target: Rs 9800 |Stop loss: Rs 8540 |Return 10%
On the daily chart, the stock has given a falling wedge breakout which suggests reversal of the previous trend for the short term traders’ perspective.
On the weekly frame, the stock price has moved above previous two weeks’ high which again suggests the growing optimism in the counter. On the other hand, price has been finding support at Rs 8550 for the last four weeks suggesting the resilience of the level.
Moreover, a momentum indicator, RSI (14) is in bullish crossover and rising on the daily chart. Traders can accumulate the stock in the range of Rs 8900-8910 for the target of Rs 9800 with a stop loss below Rs 8540.
Analyst: Hadrien Mendonca, Senior Technical Analyst, IIFL
Larsen & Toubro Infotech: BUY | Target: Rs 1450| Stop loss: Rs 1310 | Returns 7%
The midcap IT stocks are seeing good demand and L&T Infotech has shown signs of a reversal after falling from its all-time high of Rs 1549 hit on February 22, 2018. The stock has formed a Bullish engulfing pattern on the daily charts and has seen good follow up buying too.
In addition, LTI has also found support around its 50-DEMA and has bounced back. Positive crossovers on other oscillators further confirm the probability of an upswing from here on for the stock.
Jubilant Foodworks Ltd: BUY | Target: Rs 2320| Stop loss: Rs 2159 | Returns 5%
The stock has been a complete stand out performer and has sustained its upward trajectory even when markets have sharply corrected.
The stock has broken out from its four-day consolidation pattern seen on the daily chart. The price outburst has been accompanied by a smart uptick in traded volumes too.
The relative strength indicates that the current upswing is likely to extend further. We expect Jubilant Foodworks to make a dash towards its all-time high of Rs 2320 levels in the medium term.
M&M Financial Services Ltd: BUY | Target: Rs 485| Stop loss: Rs 429 | Returns 8.5%
The stock has been consolidating in a narrow range for over six weeks and has finally broken out from the inverse head and shoulder pattern on the daily chart.
The stock has also convincingly closed above the short term as well as medium-term moving averages. Volumes have backed up the price outburst seen which further accentuates out bullish stance on the stock.
Analyst: Dharmesh Shah, AVP at ICICI Direct.com Research
Titan Company Ltd: BUY | CMP: Rs 872| Target: Rs 1048| Stop loss: Rs 768 | Return 20%| Time frame: 6 months
The share price of Titan Company has remained in a secular uptrend since December 2016 as it continues to form a higher peak and higher trough in the long-term chart.
Within this structural uptrend, the stock has undergone periodic phases of consolidation providing fresh entry opportunities for investors to ride the uptrend.
We believe the sideways consolidation over the last 11 weeks has approached maturity while the stock provides a good entry opportunity with a favorable reward/risk set-up for medium-term investors to ride the next up move within the larger uptrend.
The key support base for the stock is placed around Rs 770 region as it is the trend line support joining previous lows December 2016 (Rs 307) and September 2017 (Rs 564), which also coincides with the recent trough of December 2017 thus making it a major support for the stock.
Considering the overall positive price structure and above-mentioned technical observations, we expect the stock to continue its current uptrend and head towards Rs 1048 in the medium term as it is the price parity of the previous major rally from Rs 564 to Rs 839 (839-564=275 points) added to the December 2017 low of Rs 773 projects upside towards Rs 1048 (773+275=1048) in the medium term.
Merck Ltd: BUY | CMP: Rs 1510| Target: Rs 1750| Stop loss: Rs 1390| Return 16% | Time frame: 6 months
The share price of Merck is in strong uptrend forming a higher peak and higher trough in the long-term chart since February 2016 as it rallied from Rs 617 to January 2018 all-time high of Rs 1686.
Within this structural uptrend, the stock has undergone periodic phases of corrective decline providing fresh entry opportunities for investors to ride the uptrend.
In the present scenario, we believe the stock has undergone a healthy corrective phase over the last nine weeks and is currently attractively placed near key value area of Rs 1450-1500, thus providing fresh entry opportunity from a medium term horizon
The stock in the last few sessions has been witnessing base formation around the major support area of Rs 1450-1500 as it is the confluence of the following technical parameters:
a) Rising trend line support joining the lows of December 6, 2017 (Rs 1081) and February 6, 2018 (Rs 1428) placed at Rs 1500 levels
b) 38.2 percent retracement of the previous major up move (Rs 1081- 1686) placed at Rs 1455 levels
Based on the above technical observation we believe the risk-reward remains favourable and offers a fresh entry opportunity
Time wise the stock has already taken nine weeks to retrace just 50 percent of the previous seven weeks up move (Rs 1081 to Rs 1686). Shallow price wise correction and elongated time wise consolidation highlights the robust price structure.
Considering the robust price structure and above mentioned technical observations we expect the stock to continue its current uptrend and head towards Rs 1766 in the medium term being the 123.6 percent external retracement of the entire previous Decline (Rs 1686-1350) placed at Rs 1766 levels
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