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Last Updated : Sep 24, 2020 08:22 AM IST | Source: Moneycontrol.com

Hot Stocks | OFSS a buy call for short term; sell on HDFC Bank, Ambuja Cements

The worldwide concerns over the COVID-19, September expiry rollovers and growth worries kept the domestic market under pressure.

 
 
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On September 23, the benchmark index witnessed a gap up opening and retested the trendline resistance formed on an hourly timeframe.

A strong pullback in the final hour of the trading session got the index near its yesterday's close and made it shut the day with a marginal loss.

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The worldwide concerns over the COVID-19, September expiry rollovers and growth worries kept the domestic market under pressure.

Since May 28, 2020, Nifty has never closed below its 50-day exponential moving average on the daily chart.

But in the last couple of trading sessions, the index closed below its 50-day EMA which is a sign of concern in the coming trading sessions.

The index has formed smaller degree rounding top formation on the daily timeframe. A break below 11,000 will open the gate for another 3 to 4 percent fall in the index.

An unexpected fall has signalled a weakening uptrend and a stop should be placed for any longs.

Both domestic and international markets look vulnerable to fall with super volatility.

Oversold condition in the smaller timeframe indicates a pullback in the coming couple of trading sessions, but the trend remains overwhelmingly bearish.

Going forward, the major support zone will be near 11,000–10,950 levels and the upside is likely to be capped near 11,450 levels.

Here's one buy and two sell calls for the next 2-3 weeks:

Oracle Financial Services Software (OFSS) | Buy | LTP: Rs 3,047.40 | Target price: Rs 3,300 | Stop loss: Rs 2,900 | Upside: 8%

After a prolonged correction, OFSS has given a breakout of its falling channel pattern on a monthly timeframe.

After forming a strong base around Rs 2,700, the stock has given a stellar move over the past couple of months along with the broader market recovery.

The stock belongs to that camp as it steadily kept moving higher since March lows and has already given decent returns.

The strong reversal in momentum oscillator RSI (14) from 30 levels has set up a V-shape reversal. It is currently reading near 50 levels with positive crossover on a monthly interval.

By observing Relative Strength (RS) on a weekly horizon, one can observe that the stock has been outperforming the benchmark index since April 20.

HDFC Bank | Sell | LTP: Rs 1,047.25 | Target price: Rs 980 | Stop loss: Rs 1,085 | Downside: 6%

Since the last week of March 2020, HDFC Bank has been trading in a rising channel pattern on the daily timeframe.

On September 21, the stock broke its support line and closed below the rising channel pattern and witnessed a pattern breakdown on the daily scale.

Since the breakdown, the counter is trading below its short and medium-term (21 and 50) exponential moving averages which is negative for the prices.

Bank Nifty has been underperforming Nifty for the last couple of weeks. HDFC Bank has the highest weight in Bank Nifty.

The MACD indicator has also hinted at the weakening of upward momentum by closing below its line of polarity with negative crossover on the daily interval.

Ambuja Cements | Sell | LTP: Rs 209.25 | Target price: Rs 196 | Stop loss: Rs 217 | Downside: 6%

The stock had been trading in a higher high higher low formation for the past couple of months which formed a rising channel pattern on the daily timeframe.

On September 22, the bearish candle has closed below its trendline support and witnessed a rising channel breakdown on the daily chart.

Moreover, the stock has formed a bearish engulfing candlestick pattern on the weekly timeframe and RSI (14) has drifted near 50 levels with negative crossover, slanting lower.

(The author is a technical analyst at Bonanza Portfolio)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Sep 24, 2020 08:22 am
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