The market registered a nice rebound on January 17, giving a strong close above the psychological 18,000 mark on the Nifty50 after a day of correction.
The index has formed bullish candle on the daily scale with making higher high higher low for the third straight session and has seen a breakout of downward sloping resistance trend line adjoining December 1, 2022 (all-time high) and January 16, 2023.
Also, there was a breakout of downward sloping resistance trend line adjoining multiple touchpoints from December 1, 2022 (all-time high) on four hourly charts, which all indicating possibility of positive trend going ahead.
The index gained nearly 160 points to close at 18,053, the higher closing level since January 9, while the BSE Sensex climbed more than 560 points to 60,656, driven by technology, FMCG, oil and gas, and select auto, and banking and financial services stocks.
But the broader markets underperformed frontliners with the Nifty Midcap 50, Midcap 100 and Smallcap 100 indices closing flat with a negative bias.
Stocks that were action on Tuesday included Larsen & Toubro which was the biggest gainer in the Nifty50, rising 3.5 percent to end at record closing high of Rs 2,213.1 and formed robust bullish candle on the daily charts with healthy volumes, making higher high higher low formation, while taking support at around 9 DEMA (day exponential moving average - 2,144). The stock has seen a breakout of small downward sloping resistance trend line adjoining December 16, 2022 and January 13, 2023.
IIFL Finance was the top gainer among Nifty500 stocks, climbing 9 percent to end at record closing high of Rs 514.75. The stock has made long bullish candlestick pattern on the daily charts with strong volumes, making higher high for fourth consecutive session. It has seen a breakout of horizontal resistance trend line adjoining multiple touchpoints - November 28, December 27, 2022, January 2, and January 13, 2023.
Both the stocks traded above all long term moving averages - 50 DEMA, 100 DEMA and 200 DEMA.
Brigade Enterprises shares were also in focus, rising 3.3 percent to Rs 463.4 and formed big bullish candle on the daily charts with slightly above average volumes, making higher high higher low formation for second straight session. The stock has seen a breakout of downward sloping resistance trend adjoining multiple touchpoints - December 1, December 30, 2022, and January 3, 2023. It has been trading well below all long term moving averages for more than a month now, though it closed above 9 DEMA for the first time in current month.
Here's what Rohan Patil of SAMCO Securities recommends investors should do with these stocks when the market resumes trading today:
IIFL Finance prices on the daily scale were trading in a smaller consolidation range from past 15 days and were facing a strong resistance near Rs 485 levels. On Tuesday, we witnessed a strong spurt in the prices which resulted in a consolidation breakout above Rs 485 level.
Technically, the bullish crossover of 9 EMA over 21 EMA is known as the golden cross – the medium-term bullish trend is spotted on the daily time frame. The counter is trending above the golden cross and the retest offers the low risk – high reward entry.
One can initiate a buy at CMP Rs 514.75 and more at dips near Rs 504 with an upside target of Rs 545 in next 1-3 months. Investors should strictly follow the stop-loss of Rs 483.
L&T on the daily time frame is trading in a higher high higher bottom formation within the rising channel pattern, which confirms the bullish trend in the counter.
As can be seen in the chart prices have given a smaller degree horizontal trend line breakout within the rising channel pattern after a consolidation.
The recent breakout is confirmed with higher volumes and previously such robust volume activity was witnessed on November 1, 2022. By analysing the above volume pattern, we can understand that prices normally move higher with a steady pace post price volume breakout.
One can initiate a buy at CMP Rs 2,213 on Tuesday and more at dips near Rs 2,180 with an upside target of Rs 2,300 in next 1-3 months with a stop-loss of Rs 2,120.
Brigade as can be seen in the chart is trading in a falling wedge pattern and prices have witnessed a breakout just above the upper band of the pattern on the daily time frame.
In the lower pane of the chart, the Relative Strength Index (RSI) oscillator which measures the strength of the trend has given falling wedge pattern breakout which is placed at above 45 levels with bullish crossover on the cards. On the other hand, prices have also closed above its 9 & 21 EMA which indicates bullish tendency in the counter.
One can initiate a buy at CMP Rs 463.40 on Tuesday and more on dips near Rs 456 with an upside target of Rs 484 in next 1-3 months and its stop loss would be Rs 442.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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