Short-Term Stock Picks: GNFC, Canara Bank, and Birlasoft Could Offer Up to 10% Returns

In the recent market landscape, the Nifty index demonstrated a noteworthy rebound, finding support at its 200-day Exponential Moving Average (EMA), which stood at 18,835. Following this bounce back, the Nifty recovered by approximately 321 points from its recent low of 18,837. However, it’s important to note that this recovery occurred with relatively lower trading volumes. Even though the Nifty showed improvement, it remains below its closest moving average, the 5-Day EMA at 19,151.

During the past week, the Nifty broke through critical support levels at 19,333 and 19,230. This resulted in the index forming lower highs and lower lows on its daily charts, along with dropping below its 20, 50, and 100-day EMA, indicating a medium-term downtrend.

As the Nifty undergoes its current pullback, the former support levels of 19,230 and 19,333 are anticipated to act as resistance levels for the index. Additionally, technical indicators and oscillators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have turned bearish on the Nifty’s weekly chart.

Furthermore, the number of stocks trading above the 200-day Simple Moving Average (SMA) has started to decrease after a considerable period for the NSE500, which suggests a weakening breadth in the market.

Considering the positional technical setup, it is advisable to consider reducing long positions within the resistance range of 19,230-19,333. If the Nifty falls below 18,837, it may move towards the next support at 18,525, which represents the 50 percent retracement support level for the entire swing from 16,828 (March 2023 bottom) to 20,222 (September 2023 top and all-time high).

Here are three short-term buy recommendations:

GNFC: Buy | Current Price: Rs 684 | Stop-Loss: Rs 629 | Target: Rs 750 | Potential Return: 10 percent

Gujarat Narmada Valley Fertilizers and Chemicals (GNFC) has been forming higher highs and higher lows on its daily chart. The primary trend for the stock is bullish, as it remains above key moving averages. Indicators and oscillators have shown a bullish trend for the stock. In the October series, the stock has witnessed significant long build-up in the derivative segment, confirming the uptrend.

Canara Bank: Buy | Current Price: Rs 382 | Stop-Loss: Rs 361 | Target: Rs 405 | Potential Return: 6 percent

The stock price recently marked a fresh 52-week high at Rs 387.80, accompanied by a surge in trading volumes. Canara Bank has demonstrated resilience in the face of recent market weakness. It has also broken out from a Flag pattern on the weekly chart, indicating the continuation of the primary uptrend.

Birlasoft: Buy | Current Price: Rs 542 | Stop-Loss: Rs 509 | Target: Rs 590 | Potential Return: 9 percent

The stock price recently broke out from a Bullish Flag pattern on the daily chart. The primary trend for the stock is bullish, as it has consistently formed higher highs and higher lows on the weekly charts. Indicators and oscillators on both daily and weekly time frames have also exhibited strength.