Let us discuss the chart patterns of Reliance Industries. It has been one of the biggest underperformers last week. What are the charts suggesting?
When Reliance moved up from Rs 1,900 levels to almost Rs 2,200 in a matter of 4-5 trading sessions recently, it took both investors and short-term traders by surprise. They were not expecting too much of a move for a stock like Reliance, which had remained sideways. The stock then went into a consolidation mode in the last four days.
On short-term charts, there are two advantage points for Reliance Industries now. The RSI is at an extremely oversold territory. This indicates that the closing price of the stock should act as a stable support zone in the near term. There could be a higher probability of a bounce shaping up for Reliance Industries this week or so.
The other advantage point for Reliance Industries is that the the market has got back into risk-on mode. Traders and investors who are probably sitting with marginal losses would have the risk appetite to hold on to the stock. I think RIL should stabilise at current levels of Rs 2,100 with a high probability of a bounce from current levels.
What are your buy calls for this week?
It is going to be an interesting week. I will flag off three calls.
The first one is a buy on ABFRL or Aditya Birla Fashion and Retail Ltd. The stock has made a very strong breakout. It is trading very close to its swing high levels on short-term as well as on longer-term charts. It looks attractive for a longer term target of Rs 280. A stop loss could be kept at Rs 195.
The second one is a buy on Eicher Motors. This is also one of the few stocks that had shown signs of strength. It went into a consolidation phase, but it is forming an inverse head-and-shoulder pattern. I am expecting a breakout and a continuation move on Eicher Motors. Buy with a target price of Rs 2,850 with a stop loss at Rs 2,650.
The third one would be a buy on HDFC. It is interesting because in the last four days of the end of the previous expiry and the start of the fresh expiry, the stock has seen a very good set of volumes. Somehow, the stock has managed to recover from its earlier lows of sub-Rs 2,460-2,465. I would sense that this is more to do with buying volumes. The stock can head towards a breakout, with financials and banking stocks doing pretty well. Buy with a target price of Rs 2,650 and keep a stop loss at Rs 2,450.
