Hindalco Industries has now reached its cluster of support around Rs 475 and the way it recovered on April 27 to form a ‘Bullish Hammer’ pattern at the ‘200-day SMA, the correction seems to have been arreste.
Sameet Chavan
May 02, 2022 / 06:33 AM IST
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The market started the week gone by gap down and tested sub-16,900 levels on weak global cues, though the situation improved as the days progressed but some nervousness was clearly visible.
In fact on April 29, the way market remained around the week’s higher range, things looked rosy but suddenly the market nosedived in the last half an hour of trade. Before anyone could come to terms with it, the Nifty had not only erased all gains but also ended the week around 17,100 with a cut of over eight-tenths of a percent.
The speed at which the market tanked was intimidating. Was it a blip or not, only time will tell but the market definitely didn’t have a good start to the May series.
In the last week and a half, the market has shown some resilience when compared to most global peers. While most developed markets corrected nearly 5-7 percent, we remained in the 2-3 percent band. This is an indication of the inherent strength and hence, the moment we see some relief globally, our markets will be the first to take a leap.
We continue to remain hopeful as long as 16,900–16,800 are defended successfully. Now, with the last two weeks of rangebound movement, the daily time frame chart exhibits a ‘Triangle’ pattern and prices are inching closer to their apex point. A breakout in either direction is imminent.
We expect it in the northward direction, where 17,400–17,450 are the levels to watch out for. The moment the level is crossed, a lot of individual stocks will likely participate in the next leg of the rally.
This view, however, would be negated if the index slides and sustains below the lower range.
Most key indices are placed at a crucial juncture and are waiting for some trigger to make a move. We hope to witness a much-awaited breakout in the early part of May, which will make traders smile once again.
Here are two buy calls for the current week:
Coromandel International: Buy | LTP: Rs 894.55 | Stop-Loss: Rs 854 | Target: Rs 952 | Return: 6.4 percent
This stock has been consolidating in a wider range for the past eight months. On April 28, the price burst through the stiff hurdle of Rs 860 with authority.
If we look at the volume activity, we can see more than five times its average daily volumes. With this, the price configuration on the weekly time frame becomes extremely strong.
In addition, the ‘RSI Smoothened’ oscillator is now pointing upwards, which is likely to provide some impetus for the next leg of the rally.
We recommend buying the stock for a trading target of Rs 952. The stop-loss can be placed at Rs 854.
Hindalco Industries: Buy | LTP: Rs 482.65 | Stop-Loss: Rs 466 | Target: Rs 508 | 5 percent
The metal space has gone through a rough patch in the last month and a half. Hindalco has been the worst-performing stock, correcting more than 20 percent from its recent high.
The stock has, however, reached its cluster of support at around Rs 475 and the way it recovered on April 27 to form a “Bullish Hammer” pattern at the 200-day simple moving average, the correction seems to have been arrested.
Since prices are extremely oversold, some trading bounce cannot be ruled out in the coming days. We recommend buying this stock for a near-term target of Rs 508. A strict stop-loss needs to be placed at Rs 466.
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