Technical Analysis

Stocks that will see action this week

| Updated on February 28, 2021

BPCL (₹449.8)

Performs fresh breakout

 

Supported by rising crude oil price, the stock of Bharat Petroleum Corporation Limited (BPCL) has been moving up since October last year. It bounced off the 200-day moving average support in mid-October. Since then, the scrip has been forming higher highs and higher lows and the price has now rallied past both 21- and 50-day moving averages, indicating good upside momentum. Last week, it breached a strong resistance at ₹435 with good volume and made a fresh seven-month high of ₹467.8 on Thursday. This has opened the door for further strengthening. Substantiating this, the average direction index is signalling a strong uptrend. So, traders can buy with a stop-loss at ₹435. The stock can rise to ₹475.

Coal India (₹152.2)

Hits 11-month high

 

Even as most of the stocks rallied from their respective lows made in March 2020, the stock of Coal India failed to attract the attention of the bulls until recently. Although the stock made a fresh 52-week low of ₹109.6 in last October, the stock was largely trading in a broad sideways trend, i.e., between ₹120 and ₹150 since March last year up until last week. But then, the stock saw a sharp increase in price accompanied by enormous volume and consequently it broke out of the multi-month resistance of ₹150 and registered a fresh 11-month high of ₹163 on Friday. Thus, the bulls seem to have come with strong intentions and so, the scrip can gain further. Thus, one can buy with a stop-loss at ₹145 for a target of ₹164.

Indraprastha Gas (₹492)

Validates a double-top pattern

 

The stock of Indraprastha Gas saw a steady increase in price since mid-October last year. That is, it started to rally from about ₹365 and reached ₹570 levels in January 2021. But then, it saw a price correction which was arrested by the support at ₹514. Buyers, going by the logic of buy on declines, started to go long and pushed the price towards a fresh one-year high of ₹594.9 before a couple of weeks. But the rally did not sustain, and the price fell, translating the price action into a double top – a bearish indication. The decline did not stop as the bulls gave up which resulted in the stock breaking below the neck-line of ₹514, turning the outlook bearish. So, traders can sell with a stop-loss at ₹514 for a target of ₹455.

Berger Paints (₹679.9)

Downtrend strengthens

The stock of Berger Paints looks to have turned bearish as it broke below the crucial support of ₹700 on Friday. Thus, the scrip has formed lower highs – lower lows price pattern, giving a weak outlook. The bearish inclination is substantiated by the relative strength index and the moving average convergence divergence indicators on the daily chart as they entered their respective negative territories. The average directional index is showing that the downward momentum is gaining traction. Moreover, the 21-day moving average has slipped below the 50-day moving average, potentially altering the medium-term trend to bearish. Therefore, traders can initiate fresh shorts with a stop-loss at ₹715. The stock is likely to depreciate to ₹620 and then to ₹590.

Bajaj Finance (₹5,264.9)

Breaches a key support

The stock of Bajaj Finance, after cancelling the resistance at ₹5,360 in the first week of the current month, rallied to make a fresh lifetime of ₹5,822.2 before two weeks. But the uptrend lost steam and the stock has been on a descend over the past couple of weeks. The relative strength index and the moving average convergence divergence indicators failed to form fresh highs even as the stock did so, hinting at bulls losing control. In line with this, the decline extended over the past few sessions as well and by breaching the important level of ₹5,360 – a resistance turned support level – the stock has increased the likelihood of further drop. Given the above factors, sell the stock a with stop-loss at ₹5,460 for a target of ₹4,980.

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Published on February 28, 2021
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