News Hour: Top six short term trading picks in weak market

(Disclaimer:
The report is based on technical views and information given by analysts. Please consult your financial advisor before taking any position in the stocks mentioned.)

MUMBAI: The Indian markets are witnessing a weak session as disappointing guidance from Infosys Technologies and weak global cues dampened sentiment. The better-than-expected August IIP datafailed to provide support. 

Following are the top six trading picks that stand a chance to give good returns in the short term. 

Shubham Agarwal, CMT, Senior Analyst, Technical Equities,Motilal Oswal Securities 

1) Allahabad Bank - Bank Nifty has been consolidating in a narrow band to form a continuation pattern and is likely to breakout on the upside. Mid-caps banks have been moving up with most of the scrips forming bullish patterns. 

Allahabad BankBSE -1.09 % took support on the long term chart at Rs 115 and is now headed higher. The rally from Rs 115 to Rs 153 was retraced exactly 50 per cent with a low at Rs 135 post which it has formed a piercing line pattern on daily chart. 

We recommend buying the scrip for a target of Rs 153 and a stoploss can be placed below Rs 135. 

2) India Cement -The scrip broke above its important resistance of Rs 91 two weeks back and for past some days it has been pulling back to re-test the support area of Rs 90-91. A reversal from the support area indicates that the up-trend can resume for a higher high. 

We recommend buying the scrip for a price target of Rs 102 and a stop can be placed below Rs 90.5. 

3) ICICI Bank - Private Banks were lagging behind but after the outperformance from the PSU space, rotation indicates that private banks can take the lead. ICICI BankBSE -1.33 % formed an inverse Head & Shoulder pattern which was confirmed with a breakout above the neckline at Rs 1000. The recent consolidation can be termed as a continuation pattern and the odds are high for an upward breakout. 

We recommend buying the scrip for the pattern target of Rs 1,200 and a stoploss can be placed below the continuation pattern low at Rs 1,038. 

4) Tata Steel - Metal as a sector has been neutral for past some trading sessions and is now showing some buying interest. A small divergence is visible in prices as Nifty has been moving lower but metal stocks are refusing to make lower lows. 

The scrip has made an inverse head & shoulder pattern with a neckline at Rs 418 and a closing above it is a positive development. Short term traders can buy the scrip for a target price of Rs 445 and a stoploss can be placed below Rs 408. 

IIFL: 

5) Larsen & Toubro Oct Futures: The stock, on the daily chart, has been forming 'ending diagonal' with confirmation signal from negative RSI indicator from overbought levels. However for complete pattern to unfold prices could test the rising resistance line placed at Rs 1,685. 

The downside potential for the counter is seen at Rs 1,580 which turnout to be 20-DMA. Sell the stock above Rs 1,682 with a stoploss of Rs 1,717 for a target of Rs 1,612. 

6) Apollo Tyres: On the daily line chart, the stock has generated trend reversal forming a 'falling wedge'. The stock has already went through a correction phase declining from peak of Rs 102 to a low of Rs 84 which is placed around its 100-DMA. Breakout is also seen on daily RSI after formation of falling wedge, this provide supplementary evidence of sustainable upmove in the counter. 

BUY above Rs 88 for a target of Rs 92 and keep a stoploss of Rs 86. 
(Source: economictimes.indiatimes.com)