Technical Analysis

Movers and Shakers: Stocks that will see action this week

Akhil Nallamuthu |BL Research Bureau | Updated on: May 21, 2022

Confronting bullish trend versus bearish trend with up and down arrows on dark background. Blurred Japanese candles on background. Vector image. istock photo for BL

Here is what the charts say about the shares of Ambuja Cements, Piramal Enterprises and Vedanta Ltd

Ambuja Cements (₹363)

At a strong barrier

The stock of Ambuja Cements witnessed a sharp rally in April. However, after reaching ₹380 levels, the upside movement lost momentum. For the past few weeks, the scrip is hovering in and around ₹360-380 region. A falling trendline resistance coincide at ₹380 making it a strong barrier and therefore, the likelihood of a fall from here is high. On the downside, the stock will most probably decline to the support band of ₹280-300, may be in a couple of months.

Traders can short the stock at the current level and add shorts when price moves up to ₹380; the average price will be around ₹372. A rally beyond ₹380 is less likely and so, place initial stop-loss at ₹395. When the price drops below ₹325, alter the stop-loss to ₹365. Liquidate all the short positions when the stock touches ₹300.

Piramal Enterprises (₹1,916.35)

Further fall likely

Since the beginning of 2022, the stock of Piramal Enterprises has been on a decline. It breached the key level of ₹2,000 by the end of the week before last week. Even though the stock recovered a bit, it could not reclaim the ₹2,000-territory and the likelihood of further fall is high. Even if the stock manages to appreciate above ₹2,000, a rally beyond ₹2,170 is a low-probability event.

Before the end of this year, the price can drop to ₹1,250. But note that there could be a pause at around ₹1,515. Traders can short the stock now and short more if price rallies to ₹2,170, so that the average price is ₹2,045. Initial stop-loss can be at ₹2,320. When stock falls to ₹1,515, book one-third of the total positions and tighten the stop-loss to ₹1,750. Liquidate the remaining at ₹1,250.

Vedanta Ltd (₹314.4)

Limited upside

After posting loss for five straight weeks, the stock of Vedanta ended in the green last week. However, considering the price action over the past few weeks, the rally is likely to be a corrective one and the upside is limited. From the current level of around ₹314, the scrip could appreciate to ₹345 and not cross over that level. Then the stock might resume the downward movement, potentially declining to the supports at ₹250 and ₹225. Given the above factors, one can considering shorting the stock now and accumulate more shorts when the price moves up to ₹345.

Keep initial stop-loss at ₹375. When the stock drops below ₹250, revise the stop-loss down to ₹280. We recommend to fully exit the short positions at ₹225, as there could be a bounce off this level.

Published on May 21, 2022
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