Indian benchmark staged a sharp rebound on Monday after a dull opening and settled with strong gains for the day. The expected rate cuts in the US supported the market sentiments. BSE Sensex jumped 375.61 points or 0.46 per cent, to end the session at 81,559.54. NSE's Nifty50 tanked 84.25 points, or 0.34 per cent, to close at 24,936.40 for the day.
Some buzzing stocks including Bharat Heavy Electricals Ltd (BHEL), ITC Ltd and Tata Motors Ltd are likely to remain under the spotlight of traders for the session today. Here is what Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers has to say on these stocks ahead of Tuesday's trading session:
Bharat Heavy Electricals | Buy | Target Price: Rs 280 | Stop Loss: Rs 250
BHEL formed a double top pattern near the Rs 305 level, signalling a potential reversal in its upward trend. Following this pattern, the stock has experienced a sharp decline, falling 15 per cent reduction in its price. Currently, BHEL is hovering near its 200-DEMA, an important technical level that often acts as support in long-term price trends. Coinciding with this key level, a bullish AB=CD pattern has developed, which is a harmonic pattern indicating a potential reversal. This pattern suggests that the stock may be positioned for a rebound, making it an attractive opportunity for bullish traders. The RSI on the daily chart has entered the oversold zone, further supporting the potential for a price bounce. Given these conditions, there is a strong case for going long in BHEL within the Rs 258-262 price range. The upside target for this trade is Rs 280, while the recommended stop-loss is 250 on a daily closing basis to manage risk. This strategy suggests that a reversal may be imminent, providing a favourable risk-reward scenario for traders.
ITC | Range-bound
ITC has been trading in a consolidation range between Rs 495 and Rs 515 for the past few sessions, reflecting a phase of price stabilization after previous movements. This range-bound behaviour suggests that the stock is in a period of indecision, with neither bulls or bears able to take control. ITC signalled potential bullish momentum. However, despite this upward movement, the stock failed to close above the key breakout level of Rs 515, which is critical for confirming further upside. The daily RSI has not yet climbed above the 70 zone, which would indicate strong overbought conditions and signal increased bullish momentum. Since the RSI remains below this level, it suggests that the stock may still lack the necessary buying strength to break decisively out of its consolidation phase. For those who have already bought ITC, it is advisable to monitor the breakout level closely. For new positions, it would be prudent to wait for a confirmed breakout above Rs 515 on a daily closing basis. A daily close above this level could signal a fresh bullish trend and offer a better entry point for long positions.
Tata Motors | Avoid
Tata Motors made a peak near the Rs 1,142, signalling a possible exhaustion in its upward momentum. The stock has experienced a sharp decline, resulting in a 10 per cent drop in its price. Tata Motors has breached both the 21 and 50-DEMA, which are important for analysing short- and medium-term trends. A violation of these levels typically suggests that the stock's upward momentum has weakened, further confirming a bearish outlook. As we look ahead, the next expected support zone is between Rs 980-985. On the indicator front, the daily RSI has dropped below the 50 level, signalling weakness in the stock's price action. An RSI reading below 50 typically indicates that selling pressure is dominating, suggesting that Tata Motors could see further downside in the upcoming sessions.