Technical Analysis

Stocks that will see action this week

Akhil Nallamuthu | Updated on January 09, 2021

Eicher Motors (₹2,760.8): Sees fresh breakout

The stock of Eicher Motors that broke out of the consolidation range of ₹2,020-2,300 in early November 2020, went off track after facing a roadblock at ₹2,700 in early December. The decline from that level dragged the scrip back to ₹2,400 levels.

But this acted as a support and the 50 per cent Fibonacci retracement level of the prior rally lies at this level. This helped the bulls charge upwards, taking the stock above ₹2,700. Subsequently, it registered a fresh 52-week high of ₹2,771.3 on Friday.

The latest breakout provides more room for the uptrend; higher volume during the rally is an indication of good strength. Given these factors, one can buy the stock on declines with a stop-loss at ₹2,640 and look for a potential target of ₹2,950.

Sun Pharmaceutical (₹620.8): Registers fresh 52-week high

The stock of Sun Pharmaceutical Industries, which had been steadily rising since March 2020 after making a low of ₹312, faced a fresh bout of selling in early September. For the next two months, the scrip was under the grip of bears.

During this period, it slumped by nearly 20 per cent as it marked a low of ₹452 in October. The price slipped below the crucial support of ₹470 and the downtrend seemed to be only getting stronger. However, there was an abrupt change in the direction by October-end and the bulls swiftly took back the stock above ₹470.

Since then, it has been gaining all through, and on Friday, it made a fresh 52-week high of ₹622.8 before ending the session a bit lower. Traders can buy the stock with stop-loss at ₹595; the target can be at ₹650.

MindTree (₹1,740.1): At a lifetime high

On Friday, the stock of MindTree hit a fresh lifetime high of ₹1,745 and it is likely to appreciate further. The rally in the stock was set in April 2020 when it registered a low of ₹692; as on Friday, it has gained by about 2.5 times as it ended at ₹1,740.

Right now, the price action hints that the scrip is likely to move farther on the upside. Supporting the bullish bias, the daily relative strength index has been rising and the moving average convergence divergence indicator on the daily chart continues to trace the upward trajectory.

Also, the stock is well above the 21- and 50-day moving averages, indicating good bullish momentum. Considering these factors, traders can take a bullish view and go long on the stock with a stop-loss at ₹1,650; the target can be at ₹1,840.

Bharti Airtel (₹540.2): Rallies past a hurdle

The stock of Bharti Airtel witnessed a bullish trend-reversal in March 2020 after taking support at ₹400. Within a span of two months, the stock breached a strong resistance at ₹570 and then made a fresh high of ₹612.

But the rally lost steam, and after consolidating for few months, the stock began to descend in August. The decline then accelerated, resulting in the stock depreciating to ₹400. Thus, it gave up all the gains it had gathered in the prior uptrend. But the good thing is, the support at ₹400 arrested the fall again, from where the bulls took control.

ollowing this, the stock broke out of the resistance at ₹524 last week, opening the door for further strengthening. So, the stock can be bought for a target of ₹570. The stop-loss can be at ₹520.

Power Grid (₹203.5): Confirms bull-flag pattern

The stock reversed direction upwards in mid-October 2020 after taking support at ₹155. The uptrend hit the resistance band of ₹197-200 in late November last year. Unable to break out of this level, the price action turned sluggish and gradually softened to ₹185 — a support level.

The 50-day moving average lies at this level, making it a considerable support. But last week, the stock regained momentum and on Friday, closed above the key barrier at ₹200 with significant volume, turning the outlook positive.

The breakout has confirmed a bullish- flag pattern on the weekly chart, hinting at a sharp rally in the upcoming trading sessions. So, traders can be bullish and initiate long positions with a stop-loss at ₹197. The potential target can be ₹215.

Published on January 09, 2021

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