By Mr. Sameet Chavan, Chief Analyst -Technical and Derivatives, Angel One Ltd
The global markets have had a dream run for the last two years, but this year has been challenging due to unpleasant events on the global front. The downward trends began with the Russia-Ukraine war, and a ripple effect was felt on commodities and supply chains, leading to rising inflation. In the last ten months, the markets have undergone a lot of tremors. Indian markets have been no different, although they are in a better position than global peers because of certain macro factors.
Market volatility is inevitable as bad news continues to come from Europe with fresh escalations in the Russia-Ukraine war. However, even in this environment of gloom, India is structurally positive and the fastest growing market in the world. We are expecting domestic equities to remain resilient. With the same outlook, here are our Diwali Picks selected based on technical indicators. The promising stocks are robust and have the potential to provide attractive returns in the future.
The IT sector has witnessed a setback in the calendar year 2022. Amidst this, HCL TECH has corrected more than 25% from its record highs and has been recovering from the multi-year support around the 880-890 odd zone, which also coincides with the 50% retracement in the monthly chart.
October series has been a sigh of relief for this space wherein this counter recovered more than 8% to date and looks poised for a strong rally in the northward direction. The recent strength was supported by decent volumes, and now it has also managed to surpass 89 EMA daily.
Short to medium-term traders should look to initiate longs for the potential upside target of Rs.1210 for the next couple of months. The stop loss could be around Rs. 880 for the mentioned trade setup.
Despite the recent turbulence in the broader market, IDFC LTD has shown a remarkable performance by continuously moving in a ‘Higher Top Higher Bottom’ formation. The stock prices have almost given 2x returns from the June swing lows of 42 levels.
With such a strong move, prices have broken above a long-term consolidation seen for more than fourteen years. The overall trend remains strong and bullish, however, considering the recent strong moves showing inherent strength, we would still recommend entering the stock on a minor dip.
Short-term traders can accumulate this stock on dips of Rs 73 for a target of Rs. 94. The stop loss can be placed at Rs. 63.85.
The banking index has been a major contributor to the recent up move seen in the Nifty. CUB has been one of the strong candidates and has rallied more than 75% from the lows of Rs. 109 seen in March 2022. This counter has surpassed the strong hurdle around Rs. 190 odd zones and now appears all set for the rally beyond the psychological mark of 200. The 89 EMA on the daily chart should now act as a demand zone, and any decline shall be an opportunity to accumulate.
Short-term traders should look to initiate longs for the potential upside target of Rs. 232 for the next couple of months. The stop loss could be placed around the support zone at Rs. 169.
For over six years, the stock prices have oscillated within a broad range of 650 – 1375. After a long wait, prices have broken the higher range confirming a multi-month breakout. The momentum oscillator, i.e. RSI, after forming a base around 50 levels, has started moving northward, indicating a strong momentum move in the near term. After a long accumulation phase, we sense that the stock prices have finally come out of the slumber phase, and we are likely to see strong outperforming moves in this counter.
Short-term traders can buy the stock at current levels and on dips towards Rs. 1360 for a target of Rs. 1790. The stop loss can be placed at Rs. 1195.
Stock prices have broken above key resistance in the zone of 290 – 295, which has confirmed a long-term accumulation breakout for MAHINDRA CIE. The said levels acted as stiff resistance many times in the last few years, and the recent up move leading into the breakout is seen with good increase in volumes that augurs well for the bulls.
If we consider price structure right from the inception, there are strong bullish patterns. With the price pattern analysis, we expect a strong outperformance by this counter.
Short-term traders can buy the stock on dips in the range of 305 – 295 for a target of Rs.375. The stop loss can be placed at Rs. 267.