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Trade Spotlight | What should you do with Bharat Forge, Zomato, Newgen Software Technologies on Tuesday?

Newgen Software Technologies rallied 11 percent to Rs 411.15, the highest closing level since May 10 and formed robust bullish candle with strong volumes on the daily charts, while breaking the long downward sloping resistance trendline adjoining January 18, May 4 and July 20 this year.

August 16, 2022 / 06:11 AM IST
 
 
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The market retained its uptrend for the fifth consecutive session and closed at fresh four-month high on August 12, with support from metal, oil and gas, and select banking and financial services stocks. In fact, the fall in volatility to 17.61 levels, down 4.07 percent, also aided the momentum, though the market gains were limited on Friday.

The BSE Sensex rallied 130 points to 59,463, while the Nifty50 rose 39 points to 17,698 and formed small bodied bullish candle on the daily charts.

The broader markets also joined bulls as the Nifty Midcap 100 index gained 0.7 percent and Smallcap 100 index rose 0.25 percent.

Stocks that were in action and outperformed the benchmarks included Bharat Forge which had a strong gap-up opening and rallied 7.4 percent to Rs 790.20, the highest closing level since November 17, 2021, forming large bullish candlestick pattern on the daily charts with robust volumes. The stock has decisively broken the long downward sloping resistance trendline adjoining November 10, 2021 and August 2, 2022.

Zomato climbed 6.65 percent to Rs 61.75, the highest closing level since June 27, 2022 and formed bullish candle on the daily charts with above average volumes. Newgen Software Technologies rallied 11 percent to Rs 411.15, the highest closing level since May 10 and formed robust bullish candle with strong volumes on the daily charts, while breaking the long downward sloping resistance trendline adjoining January 18, May 4 and July 20 this year.

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Here's what Rajesh Palviya of Axis Securities recommends investors should do with these stocks when the market resumes trading today:

Bharat Forge

On the daily and weekly time frame the stock has formed higher tops and bottoms confirming trend reversal. In addition, it has also confirmed one year "down-sloping" trendline breakout at Rs 755 levels on a weekly closing basis. This breakout is accompanied with huge volumes indicating increased participation.

The stock is well placed above its 20, 50, 100 and 200 days SMA (simple moving average) which reconfirms bullish sentiments.

The daily, weekly and monthly strength indicator RSI (relative strength index) is in bullish mode indicating rising and sustained strength on a short to medium term time frame. The daily and weekly "band bollinger" buy signal indicates increased participation.

Investors should buy, hold and accumulate this stock with an expected upside of Rs 850-950 and with downside support zone of Rs 750-730 levels.

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Zomato

On the daily time, the stock has confirmed higher top and bottom formation indicating trend reversal on the short term charts. However on the weekly chart, the stock is poised for a 10-11 months "down-sloping trendline" resistance breakout at Rs 64 levels.

Currently the stock is well placed above 20 and 50 days SMA which signals positive bias. Huge volumes on rally signifies increased participation at lower levels.

The daily and weekly strength indicator RSI is in bullish mode indicating rising and sustained strength on a short to medium term time frame.

Investors should buy, hold and accumulate this stock with an expected upside of Rs 75-90, with downside support zone of Rs 52-47 levels.

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Newgen Software Technologies

On the daily time frame, the stock has observed trend reversal as it has confirmed higher top and bottom. The positive crossover of 20 and 50 days SMA signals bullish support.

With Friday's strong gains the stock managed to surpass 100-day SMA (Rs 407) on a closing basis indicating further strength. It has also confirmed "rounding bottom" formation at Rs 398 levels along with huge volumes indicating positive bias.

The daily and weekly strength indicator RSI is in bullish mode indicating rising and sustained strength on a short to medium term time frame. The daily "band bollinger" buy signal indicates increased participation.

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Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
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