Technical Analysis

Stocks that will see action this week

Akhil Nallamuthu | Updated on January 23, 2021

SBI Cards (₹1,032.7): Witnesses fresh breakout

Between September and December last year, the stock of SBI Cards and Payment Services was shackled within the price levels of ₹770 and ₹900. But in early January 2021, the scrip broke out of ₹900.

After pausing for a while near the psychological hurdle at ₹1,000, it decisively breached it last week with significant volume. Notably, the stock registered a fresh lifetime high of ₹1,040 on Friday. Now that it has moved out of the consolidation phase and crossed over the ₹1,000 mark, the likelihood of further appreciation is high.

Supporting the positive outlook, the relative strength index and the moving average convergence divergence indicator lie in the bullish territory. So, traders can buy the stock with stop-loss at ₹990; potential target can be ₹1,090.

Reliance Industries (₹2,049.6): Exhibits signs of recovery

The stock of Reliance Industries has remained calm and flat since early December last year even when the overall market was going up. The stock was non-participative in the recent rally and had been largely oscillating between ₹1,900 and ₹2,030.

But, last week, the stock gradually started to pick up momentum and broke out of the hindrance at ₹2,030 and closed the week at nearly ₹2,050. So, this can be an indication of the stock regaining traction, resulting in an upswing.

Substantiating the same, the price is now above both the 21- and 50-day moving averages, and the moving average convergence divergence indicator on the daily chart has entered the bullish zone. Hence, one can buy with a stop-loss at ₹1,975 for a target of ₹2,175.

Adani Transmission (₹477.2): Registers new lifetime high

The stock of Adani Transmission, which has multiplied over thrice since its in March 2020, hit a fresh all-time high of ₹486 on Friday. But prior to last week’s breakout, the scrip had been on a sideways crawl since early December — it was fluctuating within ₹400 and ₹460.

Now that the hurdle has been passed, the stock will most probably appreciate in the forthcoming sessions. Importantly, the breakout occurred with huge volume strengthening the case for the bulls. The daily relative strength index is showing a fresh uptick and the moving average convergence divergence indicator on the daily chart is turning its trajectory upward.

These are positive indications. So, traders can consider going long with a stop-loss at ₹450; target can be ₹515.

Divi’s Laboratories (₹3,544.7): Breaches a support level

After marking a lifetime high of ₹3,914.9 in the first week of 2021, the stock of Divi’s Laboratories has been struggling to extend the rally. In fact, it started to decline slowly, and considering the latest close, the stock has lost nearly 10 per cent from its high.

While the stock did attempt to recover last week, it could not gain past the resistance at ₹3,660. It eventually depreciated and broke below the support of ₹3,600, opening the door for more correction. Corroborating this, the relative strength index and the moving average convergence divergence indicator have slipped into bearish zones.

Also, the price has fallen below both the 21- and 50-day moving averages, giving it a negative bias. So, traders can sell with a stop-loss at ₹3,685; target can be ₹3,365.

NTPC (₹94.05): Outlook turns bearish

Looking at the daily chart of the stock of NTPC, it can be observed that it has been treading in a broad price range since April last year. That is, it has been largely trading within ₹85 and ₹105. Whenever the price moved above the ₹100 mark, it would face considerable selling pressure and then the stock would fall. A similar price pattern has developed of late. The scrip, after marking a high of ₹104.3 last week, experienced significant selling pressure, which dragged it lower. Consequently, it breached the support band of ₹96-97, which had been acting as a buffer in the past month. Considering this, along with the above-mentioned trading range of ₹85-105, the probability of further decline looks high. So, traders can sell with a stop-loss at ₹98 for a target of ₹88.

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Published on January 23, 2021
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