Two stock recommendations for next week
As long we don’t see a decisive breakout above 18225-18300, traders are advised to avoid aggressive long bets and be very fussy in stock selection.
The week gone by, trading activity started after a long weekend and it was on a positive note. However, in the mid-week, the benchmark started correcting lower and tested the levels of 17800 on Thursday. We were not done with the twists and turns as on Friday bulls made a strong bounce back to close above the 18100 and to end the week with gains just above a percent.
Even though we witnessed swings on both sides, the move was trapped within a just 300 points range that is just around a 1.5% price move. Friday’s upmove was seen after taking strong support on 50sma at 17800 however we are still not out of woods, and we still see a stiff barrier in the range 18225 – 18300 levels. As long we don’t see a decisive breakout above this resistance zone, traders are advised to avoid aggressive long bets and be very fussy in stock selection. The reason behind the cautious stance is the formation of ‘Shooting Star’ on the monthly chart seen in the October month and its negative impact cannot be ruled out as long prices don’t mark fresh new high. On the lower side, 17800 is now sacrosanct support below which we may see a sharp price correction. Traders can continue stock specific approach that are still giving outperforming opportunities however they should keep a tab on the above mentioned levels.
Stock Recommendations
UPL | Rating: Buy | Stop loss: Rs 741 | Target: Rs 830
After rebounding from its long term support of 200SMA, the prices have swiftly moved higher in the last couple of weeks. This move has resulted in prices moving out of its recent consolidation phase and a prices formation breakout of ‘Channel’ can be seen on the daily chart. This bullish breakout is supported with good increase in volume. In addition, the momentum oscillator i.e. RSI has given a fresh buy signal with its smoothed moving average that augurs well for the bulls. This counter showed relative out-performance during the choppy moves in the broader market and hence with all the above observations, we recommend a buy in this counter for a near term target of Rs. 830. The stop loss can be fixed at Rs. 741.
Bharti Airtel | Rating: Buy | Stop loss: Rs 705 | Target: Rs 810
The broad-based move for this stock has been positive however for the last couple of months it was trapped in a range after making a new high in September at the 740 levels. On the daily chart, prices after the recent consolidation have now closed above the previous high confirming a bullish breakout and a continuation of ‘Higher Top Higher Bottom’ price formation. In addition, prices have also closed above the higher range of Bollinger Band indicating a strong trending upmove in the near term post its recent congestion phase. We recommend a buy in this counter at current levels for a near term target of Rs. 810. The stop loss can be fixed at Rs. 705.
(The author is a technical analyst at Angel One Limited; views expressed are personal.)
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