Market Analysis: Indian markets extended their positive momentum, with Nifty50 and S&P BSE Sensex trading in the green, led by gains in auto and FMCG stocks. Here’s a detailed analysis of two stocks that have been in focus:
HCL Tech: Strong Bullish Momentum
Analyst: Sudeep Shah, Deputy Vice President, Head of Technical & Derivatives Research, SBI Securities
- Derivative Insights: Nifty IT outperformed the indices, surging by nearly 3%, with HCL Technologies showing a notable long build-up. The price of HCL Tech rose by 2.70%, and the cumulative Open Interest (OI) for the current, next, and far series surged by 7.09%. Option chain analysis revealed fresh call buying and call short covering, indicating a bullish sentiment.
- Technical Breakout: HCL Tech experienced a Symmetrical Triangle pattern breakout on the daily scale, reaching its highest level post January 2022. The breakout was supported by robust volume, and a bullish candle on the breakout bar added strength to the move.
- Indicators and Momentum: All moving averages and momentum indicators signal further bullish momentum. The daily Relative Strength Index (RSI) surged above the 60 mark for the first time since September 2023. The stock closed above the upper Bollinger Band, indicating strong bullish momentum.
Recommendation: Market Analysis, Consider accumulating the stock in the range of Rs 1315-1300 with a stop loss of Rs 1270 on a closing basis. The upside potential is expected to test levels of Rs 1390, followed by Rs 1430 in the short term.
Tata Motors: Horizontal Trendline Breakout
- Technical Breakout: Tata Motors witnessed a horizontal trendline breakout on the daily scale, accompanied by higher volume. The stock achieved a fresh all-time high, demonstrating strong outperformance compared to the broader indices, particularly in the auto sector.
- Moving Averages and Strength: Trading above major short and long-term moving averages indicates strength at higher levels. Momentum indicators and oscillators are bullish, and derivative data supports the overall positive chart structure.
- Short Covering Rally: Tata Motors experienced a short covering rally during the week, with a surge of over 4% since Monday, and a cumulative Open Interest decline of nearly 5%.
Expectations: Market Analysis, Anticipate the stock to sustain its upward movement, testing levels of Rs 720 followed by Rs 750 in the short to medium term. Maintain a stop loss at Rs 658 on a closing basis.
As with any market analysis, it’s essential for investors to conduct thorough research and consider their risk tolerance before making investment decisions based on the provided recommendations.