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Trade Spotlight: What should investors do with Tata Steel, Coforge & Aarti Drugs?

Here's what Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities Ltd, recommends investors should do with these stocks when the market resumes trading today:

May 07, 2021 / 08:03 AM IST
 
 
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Indian market closed higher for the second consecutive day in a row on Thursday supported by positive global and vaccination drive although daily cases continued to rise.

The measure announced by the Reserve Bank of India (RBI) on Wednesday also supported sentiment. Nifty50 reclaimed 14700 levels but the big resistance is still seen around 14800-15000 levels.

Sectorally, buying was seen in metals, auto, IT, as well as oil & gas. On the broader markets front – the S&P BSE Midcap index rose 0.9 percent, and the S&P BSE Smallcap index rose 0.59 percent.

Stocks that were in focus include Tata Steel, which hit a fresh 52-week high, Coforge, which rallied over 17 percent, and Aarti Drugs that rose above 11 percent on Thursday.

Here's what Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities Ltd, recommends investors should do with these stocks when the market resumes trading today:

Close

Tata Steel:

On May 6, the stock made yet another all-time high of Rs 1129. This week so far,  it has rallied over 7 percent. Post Rs 955 breakout, the stock consistently made fresh new highs.

The strong uptrend wave after breakout clearly indicates that bulls are in full control and may take the Tata Steel to Rs 1230 level.

On the daily and weekly charts, the stock has formed a breakout continuation formation which is grossly positive but, intraday charts, and the momentum indicators indicate the stock is in an overbought zone and high chances of quick a short-term price correction cannot be ruled out if stock trading below Rs 1035.

For the next few trading sessions, Rs 1035 should be the trend decider level for the swing traders. If it sustains above the said levels, we can expect a continuation of the uptrend up to Rs 1200-1230.

Coforge:

Post the short-term price correction, the stock was consolidating between Rs 2800 to 2950. On Thursday, due to extremely strong Q4 numbers, the stock surged nearly 20 percent.

On the daily and weekly charts, it has formed a robust price volume breakout formation. Unless it starts trading below Rs 3225, swing traders can retain an optimistic stance and look for a target Rs 3525-3575.

Fresh buying can be considered now and on dips, if any between Rs 3400 and 3300 levels with a stop loss below Rs 3235.

Aarti Drugs:

On Thursday, the stock opened on a strong note and rallied over 15 percent. However, it trimmed some gains in the second half of the day and finally closed near Rs 800 resistance level.

Sharp price surges and incremental volume activity suggest positive momentum is likely continue in the near term. However, technically we shall get a breakout confirmation only if it manages to close above Rs 800.

For the bulls, Rs 800 would be the important breakout level to watch. And if the stock manages to close above the same, we can expect a continuation of uptrend wave up to Rs 880-920 on the flip side, trading below Rs 740 may increase further weakness up to Rs 700.

Disclaimer: The views and investment tips expressed by the investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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