Buy Suzlon Energy, Tata Steel shares; avoid Bajaj Finance stock, says Anand Rathi

Indian benchmark edged up marginally after a range-bound trading session on Monday, ahead of the US Fed's policy meeting outcome due later this week. BSE Sensex added 97.84 points or 0.12 per cent, to end the session at 82,988.78. NSE's Nifty50 gained 27.25 points, or 0.11 per cent, to close at 25,383.75 for the day.

Some buzzing stocks including Suzlon Energy Ltd, Tata Steel Ltd and Bajaj Finance 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, at Anand Rathi Shares and Stock Brokers has to say on these stocks ahead of Tuesday's trading session:

Suzlon Energy | Buy | Target Price: Rs 90 | Stop Loss: Rs 71

Suzlon's stock chart shows promising signals on the daily scale, indicating strong upward momentum. However, there is a note of caution as the stock is currently trading significantly above its 21, 50, 100, and 200 DMA. This distance from key moving averages suggests that the stock may be overextended in the short term, raising the possibility of a reversion to the mean—a scenario where the stock could pull back to its average price levels. This pullback is often seen in strong trends as the market adjusts and consolidates. Moving forward, the immediate support zone is identified between Rs 78-77, which could serve as a solid entry point for those looking to take long positions. This range provides a favourable risk-reward setup, especially with an upside target of Rs 90 in sight. To manage risk, it is advised to place a stop-loss below Rs 71 on a daily closing basis.

Tata Steel | Buy | Target Price: Rs 165 | Stop Loss: Rs 147.5

Tata Steel experienced a violation of a key bearish trendline on the daily chart, indicating a potential reversal in momentum from its previous downtrend. Before this violation occurred, it had found solid support along the high-low band of the 200-DEMA, a crucial indicator of strong support levels. Additionally, on the daily chart, a bullish divergence was observed in the RSI, where it trended higher even as the stock price remained low, signaling a weakening of selling pressure and the possibility of an upward price movement. This bullish divergence materialized near a critical demand zone and a previous breakout range, boosting the positive sentiment around the stock. These technical factors collectively suggest that Tata Steel is poised for a potential strong rally. Given these signals, a long position is recommended in the price range of Rs 152-155, with an upside target of Rs 165. To manage risk, it is advisable to set a stop-loss at Rs 147.5.

Bajaj Finance | Avoid | Support: Rs 7,200

After an impressive and uninterrupted rally in Bajaj Finance, resulted in remarkable gains. The upward momentum came to a halt in the most recent trading session. It formed a bearish engulfing pattern on the daily chart, a strong reversal signal where the selling pressure completely overshadows the previous day's gains, indicating a potential shift in sentiment. Additionally, there is a bearish divergence on the Daily RSI, where the RSI starts to decline even as the price continues to rise, signalling weakening momentum and the possibility of a correction. This divergence, coupled with the bearish engulfing pattern, raises concerns about the sustainability of the recent rally. Given these developments, a cautious 'wait and watch' approach is advised. It is prudent to avoid making long positions in Bajaj Finance unless the crucial support level of Rs 7,200 is tested and holds firm, as a break below this level could signal further downside.