ONGC, Nestle among top stocks to buy, charts show strength; check Nifty’s support, resistance levels

It is crucial for the market to close above the levels of 14450/48100 to maintain the upward bias

By Shrikant Chouhan

Indian stock market closed at the lowest point of the day on Tuesday. The market is not stabilizing at any specific level, which is an indication of some more uncertainties in the near term. The Nifty/Sensex closed below the level of 14500/48300 that would keep open the possibilities of hitting 14400/14370 (48000/47900) levels, however, it is crucial for the market to close above the levels of 14450/48100 to maintain the upward bias. On the higher side, 14600/48500 and 14750/48900 would be the main obstacles. Today, although there was some profit-taking seen in the PSU stocks on Tuesday, we feel they can easily attract follow up buying in the next couple of sessions.

ONGC
BUY, CMP: Rs 109.65, TARGET: Rs 116, SL: Rs 106

On the monthly chart, it is observed that post its drop from the highs of 180 the stock went into a correction phase, however, the stock reversed after forming the strong base at its demand zone and started trading in an upward channel. Additionally current range breakout with incremental volume activity on the daily chart indicates the stock has good potential for further upside.

Canara Bank
BUY, CMP: Rs 141.35, TARGET: Rs 150, SL: Rs 136

For the last two months, the stock has been in a downward channel after hitting the double top chart pattern at around 172, and thereafter it found support at its previous lows and reversed sharply by forming a hammer candlestick pattern. Moreover the recent formation of the Cup and Handle chart pattern on the daily time frame with rising volumes indicates bullish movement in the near term is very likely to persist.

Nestle India
BUY, CMP: Rs 16,546.6, TARGET: Rs 17,400, SL: Rs 16,200

For the last few days the stock was trading in a lower top and lower bottom series chart formation and eventually the downward move took a pause at the rising trend line and it seems that the bulls got into action, further the technical oscillator stochastic indicates trend reversal as it is signaling the oversold condition of the counter.

Cummins India
BUY, CMP: Rs 845.3, TARGET: Rs 890, SL: Rs 825

Strong reversal formation is evident from the multiple support area of 820, inverted hammer candlestick formation followed by star pattern on the weekly scale hints at bullish momentum in the counter incoming horizon.

(Shrikant Chouhan is Executive Vice President (Equity Technical Research), Kotak Securities. Views expressed are the author’s own.)