Technical Analysis

Stocks that will see action this week

Akhil Nallamuthu | Updated on February 20, 2021

PowerGrid (₹232.2): Breaches a multi-year high

Extending the rally, the stock of Power Grid Corporation of India closed with a gain of nearly 10 per cent last week. With that, the scrip has closed in the green for three consecutive weeks, indicating a strong momentum.

Last week, as it went up, the stock rallied past the high of ₹226.6 registered in August 2017 and then hit a fresh lifetime high of ₹238.3 on Thursday, before ending the week a little lower at ₹232.2. The price is now well above both the 21- and 50-day moving averages, indicating bulls are in control.

This is substantiated by indicators such as the relative strength index and the moving average convergence indicator that remain in the positive territory on the daily chart. So, traders can buy with a stop-loss at ₹222 for a target of ₹245.

Hindalco Industries (₹308): Registers a fresh lifetime high

After witnessing a correction during January this year, the stock of Hindalco Industries got back into the uptrend after finding support at around ₹225. The buyers came back strongly and pushed the stock price above the prior high of ₹275.4 made in early January, and went on to make a fresh all-time high of ₹313.3 on Friday.

Notably, it closed above the hindrance of ₹300. The breakout was accompanied by considerable volume, adding to the strength of the upmove. As it stands, the price action does not show any weakness and the average directional index is signalling that bulls have an upper hand over the bears.

Given the prevailing price action, one can expect the stock to clock more gains; so, buy on declines with a stop-loss at ₹295. Targets can be ₹320 and ₹325.

HPCL (₹244): Cracks a crucial hurdle

After multiple attempts to break the resistance of ₹240 over the past year, the bulls finally overcame this roadblock last week. The breakout volume was solid, and the scrip registered a fresh 52-week high of ₹252.4 on Friday.

Prior to the breakout, the stock had been largely trading in a broad range between ₹210 and ₹235 after recovering from the October lows of about ₹163. The price action — a rally followed by a consolidation phase and then a breakout — is an indication of a strong uptrend, and the scrip will most likely move upwards in the upcoming sessions.

The relative strength index and moving average convergence divergence indicator are showing fresh uptick. Hence, traders can go long with a stop-loss at ₹234 and for a target of ₹260.

Aurobindo Pharma (₹888.6): Forms a head-and-shoulders pattern

The stock of Aurobindo Pharma, which has been battling to establish a rally since the beginning of 2021, failed to do so. The scrip might be heading south, especially considering how the stock has been weakening over the past couple of weeks.

There are other factors that hint at a downswing in price — the relative strength index has slipped below the midpoint level of 50 and the moving average convergence divergence indicator on the daily chart has entered the bearish territory. Moreover, the average directional index shows that the bears have been consistently gaining ground.

Also, we can spot a head-and-shoulders pattern on the daily time-frame. So, one can short the stock with a stop-loss at ₹935; target can be at ₹825.

Britannia Industries (₹3,331.2): Breaks a key support level

The stock of Britannia Industries, which has been weakening for the past several months, has now breached a key support, making the case stronger for the bears. Last week, the bears took down the support of ₹3,400 and the stock declined further to mark an eight-month low of ₹3,320 on Friday.

Corroborating the negative bias, the relative strength index is pointing downwards and the moving average convergence divergence indicator on the daily chart is tracing a downward trajectory. The scrip has been forming lower lows and lower highs since July last year, adding to the bearishness. Considering the above factors, traders can take a bearish view.

But since ₹3,000 is a support, sell the stock with stop-loss at ₹3,400 below ₹3,000. Target can be at ₹3,180.

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Published on February 20, 2021
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