NEW DELHI: While the market is showing signs of fatigue, there are many stocks which analysts are advising traders to buy this Diwali for healthy returns in the new Samvat. Among them are the below five stocks that technical analysts believe can be good positional trades in the new Samvat:
L&T | Holding period: 2-3 months
Motilal Oswal Securities said that L&T has given a breakout of the ‘Inverse Head and Shoulder’ pattern on the weekly scale, which has a bullish implication. The stock is continuously forming higher-highs and higher-lows on the weekly charts, indicating positive structure. The RSI oscillator is positively placed, the brokerage said while expecting stock to test Rs 2,200 level. The brokerage is advising traders to buy the stock in the range of Rs 1,792-1,760 with a stop loss of Rs 1,600. Besides, the brokerage said maximum Call open interest for L&T is seen at Rs 1,900 while highest Call writers unwinding in this strike is making it a comfortable upside.
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“Short covering seen in the October series so far will drive the stock to higher zones. One can initiate Bull Call Spread by buying Rs 1,820 Call and selling 2000 Call of the November series at a net premium cost of around 40 points,” it said.
ITC| Holding period: 1 year
Anand Rathi said after a corrective move in calendar year 2020,
has finally managed to cross its 100-EMA on a monthly basis. Besides, there is a trend line breakout, which indicates fresh upside. The stock is also seeing a Bullish Flag kind of formation on the smaller time scale.
“With regards to monthly RSI, the indicator is on the verge of a breakout from 60 level, which could bring in more strength going ahead. Investors or traders can buy the stock with a time frame of around 1 year,” it said. The brokerage has advised traders to enter the stock in the Rs 250-240 range for targets of Rs 290 and Rs 335.
Canara Bank | Holding period: Not suggested
On the daily and weekly charts, Canara Bank stock has formed breakout continuation formation. Post a breakout formation, the stock took short-term support near Rs 170 and reversed sharply, said Kotak Securities.
“In addition, robust higher high and higher low series formation on weekly charts indicate further uptrend from current levels. The texture of the chart suggests the stock is into a strong uptrend and positive momentum will continue in the near future. Unless the stock trades below Rs 160, positional traders may retain an optimistic stance and look for a target Rs 240 -260,” the brokerage said.
Kotak said fresh buying can be considered now and on dips, if any, between Rs 201 and Rs 170 levels, with a stop loss below Rs 160. Overall, one can buy 50 per cent at Rs 201 and the rest 50 per cent at Rs 170. Traders can keep the stop loss at Rs 160 for a target of Rs 240-260. Key supports for the stock is placed at Rs 190, Rs 183 and Rs 170 levels. The stock would find resistance in Rs 215, Rs 225 and Rs 240 levels.
Tech Mahindra | Holding period: 2-3 months
Motilal Oswal said TechM has formed a strong base near 50-EMA after a long consolidation on the daily scale, which is a positive sign. It has given a fresh breakout on the daily charts, indicating buying interest in the counter. The 3 RSI oscillator on all the time frames are well placed in the bullish territory which indicates that the strong momentum may continue going ahead. The brokerage expects the stock to move towards Rs 1,850 level. It advised traders to buy the stock in the range of Rs 1,517-1,480 with a stop loss at Rs 1,350. On the F&O side, Open Interest has fallen almost 9 per cent with increase in price, which suggests shorts are being covered and rollover of 97 per cent in the previous series indicates positive sentiment and strong hands on the counter.
LIC Housing | Holding period: 1 year
The multiyear chart of LIC Housing depicts that most of the time Rs 350 zone has been acting as a strong demand point for the counter. At this juncture, the stock is convincingly trading above the same, said Anand Rathi Financial Services. The stock has managed to close above its 100-week EMA and has confirmed a double bottom formation on the weekly scale.
“After a stupendous rally in real estate space, we expect the traction to get shifted to housing finance space,” it said. The brokerage has advised traders to enter the stock in the Rs 450-430 range for the targets of Rs 530 and Rs 620 levels.