Technical Analysis

Movers and Shakers: Stocks that will see action this week

Akhil Nallamuthu BL Research Bureau | Updated on October 23, 2021

HDFC (₹2,904)

Bulls gaining traction

Since March, the stock of HDFC has been trading in a broad sideways range between ₹2,360 and ₹2,630. However, in August, it broke out of ₹2,630 and as the rally continued, it broke out of the hurdle at ₹2,870 last week. This has improved the probability of the stock appreciating further and so, one can opt to buy. While there can be a pause at ₹3,000, it will eventually be taken out by the bulls following which the stock price can reach ₹3,170. Given the prevailing conditions, one can buy the stock at the current levels and average if it moderates to ₹2,850. Place a stop-loss at ₹2,740. Once the stock moves past ₹3,000, revise the stop-loss to ₹2,900 and continue to trail the stop-loss upwards with a span of 2 times the daily average true range (ATR). Exit fully at ₹3,170.

Kotak Bank (₹2,171.4)

Registers fresh lifetime high

The stock of Kotak Mahindra Bank was sluggish and was moving with bearish bias. But last week, it gained momentum and managed to crack the resistance band of ₹2,000-2050 and marked a fresh high of ₹2,201.65 on Friday. The stock appears bullish, and is expected to rally in the coming weeks. The Fibonacci extension of the previous corrective decline indicates that ₹2,315 and ₹2,460 can be the key resistances going forward. Since there is a likelihood for a minor correction, traders can buy at ₹2,170, accumulate if price softens to ₹2,080. Place initial stop-loss at ₹2,025. Exit partially (50 per cent), if the stock appreciates to ₹2,315 and shift the stop-loss to ₹2,200. Carry the remaining for the target of ₹2,460.

Dr Lal Path Labs (₹3,383.3)

Confirms bear flag

The stock of Dr Lal Path Labs, which was on an uptrend since the beginning of the year, faced a barrier at ₹4,245. The bears capitalised on this quickly and immediately began dragging the stock downwards. As an extension of the down-move, the scrip slipped below ₹3,600 last week. Bearish inclination is shown by the confirmed bear flag pattern, a broken rising trendline and the 21-day moving average (DMA) moving below the 50-DMA. So, the stock will most likely extend the bear run to ₹2,980 – the 61.8 per cent Fibonacci retracement level. So, traders can initiate fresh shorts now and sell again at ₹3,600. Place stop-loss at ₹3,780 and look for target at ₹2,980. Once the stock price falls below ₹3,240, revise stop-loss down to ₹3,480.

Laurus Labs (₹536.5)

Potential bearish trend reversal

The stock of Laurus Labs, which witnessed a rally from April on the back of the support of ₹340, lost momentum in July. Thereafter, it was largely moving in a sideways range with bearish bias. Last week, it broke below the support of ₹586, which had been stopping the decline since July. Thus, the stock has turned bearish and the price action on the daily chart resembles a head and shoulder pattern, indicating a bearish reversal. This is supported by the RSI and the MACD, which are showing bearish signals. So, one can short at current level and sell again if it rallies to ₹586; keep stop-loss at ₹610. Although there can be a pause at ₹500, the stock can be expected to touch ₹450, where one can liquidate entire short positions. Shift stop-loss to ₹530 if price slips below ₹500.

PFC (₹137.1)

Likely to see a bounce

The price band of ₹132 and ₹138 has been blocking the stock of Power Finance Corporation (PFC) since 2018. But in September, it decisively breached ₹138, turning bullish. While it rallied to mark a fresh high of ₹153.75 last week, the price dropped from that level. But this is more of a retest of the price band of ₹132 and ₹138 and so, the stock can return back to the upward trajectory. In addition to the afore-mentioned price band, the stock has supports in the form of 50-day moving average and rising trendline both of which lies in the price band. Hence, traders can go long at ₹137 and at ₹132 with stop-loss at ₹126. The scrip is likely to hit ₹150 in the near-term, where one can exit partially(50 per cent of the holding). Thereafter shift stop-loss to ₹140 and look for next target at ₹160.

Published on October 23, 2021

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