Technical Analysis

Stock picks of the week

| Updated on December 20, 2020 Published on December 19, 2020

The stock of Dr Reddy’s Laboratories, which bounced from around ₹2,500 in March, rallied in the subsequent months and hit a fresh lifetime high of ₹5,512.6 in September. But the uptrend lost strength and, thereafter, the stock has been on a descent, wherein the price softened to mark a one-month low of ₹4,656.3 a couple of weeks ago.

Nevertheless, on the back of the overall uptrend, the stock swiftly recovered and started to head north. It is now above the key level of ₹5,000, and the price action on the daily chart indicates that the bulls are making a strong attempt to gain control.

Going by the above factors, the stock will most probably appreciate and test the lifetime high and can even reach ₹5,700. So, traders can buy the stock on declines with a stop-loss at ₹4,900.

 

Infosys (₹1,189.8): Breaks out of a consolidation range

Despite the major trend being bullish, the stock of Infosys has been largely oscillating between ₹1,090 and ₹1,150 for the past one month. Thus, it looked as if the uptrend was losing traction. However, the scrip broke out of the range last week and on Friday, it recorded a fresh lifetime high of ₹1,195, meaning the stock may be picking up momentum.

 

Substantiating the positive outlook, the relative strength index and the moving average convergence divergence indicators on the daily chart are showing renewed uptick. Also, even during the consolidation phase, the stock remained above the 21-day moving average, hinting at an inherent bullish inclination.

So, traders can buy the stock with a stop-loss at ₹1,140. Potential targets can be ₹1,240 and ₹1,265.

Berger Paints India (₹710): Uptrend progresses steadily

Without much volatility, the stock of Berger Paints has been advancing since June, ie, the uptrend looks strong and steady. Interestingly, the stock has consistently bounced off the 21-day moving average over the past six months.

 

Affirming the steady nature of the upswing, the scrip has been continuously forming higher highs and higher lows on the daily chart. This is a typical buy-on-dips price action.

The rally extended last week as well, and the stock even registered fresh a all-time high of ₹719.9 on Friday, indicating that the bulls remain solid as rock. The prevailing price pattern suggests that the uptrend is likely to go on, and so, one can consider initiating fresh long positions on declines with a stop-loss at ₹660.

The stock can advance towards ₹785.

Bandhan Bank (₹408.2): Sustains above a crucial support

Bears ran berserk as the stock of Bandhan Bank crashed by about 76 per cent between October 2019 and March 2020 — the price dwindled from ₹650 to mark a low of ₹152 in March. Even as the broader market was under pressure, it appeared as if there is no way back for the stock.

 

But the scrip started to recover in April, and a couple of weeks ago, it breached a key price band between ₹380 and ₹400, which had been blocking the rally in last two months. The breakout has given a fresh lifeline for the bulls, and the stock looks set to build on further upward momentum with a price range ₹380-400 as the base.

So, traders can go long on dips with a stop-loss at ₹380 and look for a potential target of ₹450.

Pidilite Industries (₹1,731.8): Records fresh lifetime high

The stock of Pidilite Industries zoomed past the prior peak of ₹1,710 and marked a fresh all-time high of ₹1,743 on Friday with a significant jump in volume. Thus, the breakout looks robust and the scrip has posted gains for three consecutive weeks, demonstrating good positive momentum.

 

So, the likelihood of further appreciation in price is high, and ₹1,600 will be a substantial base. The relative strength index and the moving average convergence divergence on the weekly chart show there is more room left on the upside as both the indicators are moving up steadily and lie in their respective positive territory.

Henceforward, the price is likely to surge towards ₹1,850 and subsequently ascent to ₹1,920. Hence, traders can buy with stop-loss at ₹1,600.

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Published on December 19, 2020
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