Dr Reddy’s Laboratories (₹4,455)
Bullish breakout expected
The stock of Dr Reddy’s Laboratories has been forming higher bases since March last year. However, the resistance at ₹4,550 has been blocking the bulls. Essentially, the price action over the last year resembles an ascending triangle pattern. The stock has its 50-day moving average support and a trendline support at around ₹4,320. So, a drop below this level is less likely.
We expect the stock to break out of ₹4,550 and confirm the pattern soon. This can lead to a quick rally to ₹5,000 over the medium term. The risk-reward ratio favours long positions at the current level. So, one can buy the stock at the current level of ₹4,455. Place initial stop-loss at ₹4,175. Alter the stop-loss to ₹4,650 when the scrip rallies above ₹4,800. Book profits at ₹5,000.
L&T Finance Holdings (₹86.1)
Trading in demand zone
The stock of L&T Finance Holdings, which has been falling of late, is now trading in a demand zone. The price band of ₹85-86 is a strong base against which the stock bounced strongly in early February. Also, the price action shows that the stock has formed a broad range of ₹85-96, within which it has been oscillating since December last year. So, the probability of a rally from here is high.
Traders can go long at the current level of ₹86. Place stop-loss at ₹82 initially. Move the stop-loss up to ₹87 when the scrip surpasses the ₹90-mark. Further, tighten the stop-loss to ₹90 when the stock touches ₹94. Liquidate the longs at ₹96. We might see a decline after the stock rallies to ₹96.
Tata Steel (₹107)
Buying interest seen
For the past three weeks, the stock of Tata Steel has been moving within ₹104 and ₹108. Note that the price band of ₹104-106 is a good support which has arrested the recent decline. The weekly candlesticks of the past two weeks hint at good buying interest in the above-mentioned support band. Additionally, the stock has been forming higher highs and higher lows since June last year, showing a bullish bias.
So, we anticipate a rally in Tata Steel in the coming weeks. There is a potential to appreciate to ₹120 in the short term. Therefore, one can consider going long on this stock at the current level of ₹107. Keep a stop-loss at ₹102. Shift the stop-loss to ₹110 when the price hits ₹115. Exit the longs at ₹120.