Indian benchmark indices kicked off the week on a strong note on Monday amid the optimism in the global markets. Buoyancy from the FIIs and rate cut signals from the US Federal Reserve supported the sentiments at Dalal Street. BSE Sensex rallied 611.90 points or 0.75 per cent, to end the session at 81,698.11. NSE's Nifty50 jumped 187.45 points, or 0.76 per cent, to close at 25,010.60 for the day.
Some buzzing stocks including Trent Ltd, Divis Laboratories Ltd and Bharat Heavy Electricals Ltd (BHEL) are likely to remain under the spotlight of traders for the session today. Here is what Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers has to say on these stocks ahead of Tuesday's trading session:
Divi's Laboratories | Avoid
Although Divi's Labs has seen a strong upward movement recently, making it appear attractive to investors, caution is advised as the stock is nearing its historical high range of Rs 5,200-5,300 and is currently trading around the Rs 4,900 mark. Moreover, the stock has formed a bearish bat pattern near the Rs 4,900-5,000 zone, indicating a potential reversal from a rising trend to a downtrend. Given this, the price range of Rs 5,000-5,300 is identified as a significant resistance zone, meaning the stock might struggle to break through this level. Therefore, it is recommended to start booking profits if the stock moves into the 5,000-5,200 range, capitalizing on the gains made during the recent up-move.
Trent | Book Profits
Trent is trading significantly above its major EMAs, specifically the 21, 50, 100, and 200 DEMAs. When a stock trades well above these averages, it often indicates that it may be overextended or overbought, meaning the price has risen too quickly. This increases the likelihood of a 'reversion to the mean, where the stock price could correct or pull back. The hourly chart shows a bearish divergence, suggesting that the upward momentum is weakening. A potential pullback in the stock price, expecting it to drop to the Rs 6,400-6,500 range within the next few trading sessions. The recommendation is to book profits.
Bharat Heavy Electricals | Avoid
BHEL has been consolidating within a narrow range of Rs 290-303 for the past few days, indicating that it is experiencing a period of indecision. The stock is facing resistance around its 50-DEMA. It has been unable to close above the Rs 303, which is a clear indication that the stock is struggling to gain upward momentum. The RSI on the daily chart is below the 50 level, signaling a lack of buying strength or bull conviction. The recommendation is to adopt a 'wait and watch' approach. This means that investors should refrain from making new trades in BHEL until the stock demonstrates a clear breakout by closing above the Rs 303 level.