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Trade Spotlight | What should you do with Persistent Systems, City Union Bank, Carborundum Universal on Tuesday?

On the weekly timeframe, Persistent Systems gave a breakdown of double top pattern with high volumes. Post breakdown the down move was followed by strong volumes, indicating further down move.

June 28, 2022 / 06:43 AM IST
GRP: GRP sells 50% stake in JV company Marangoni GRP. The company has announced sale of its 50 percent shareholding in its joint venture company - Marangoni GRP Private Limited (MGPL), for 710,000 euros.

GRP: GRP sells 50% stake in JV company Marangoni GRP. The company has announced sale of its 50 percent shareholding in its joint venture company - Marangoni GRP Private Limited (MGPL), for 710,000 euros.

 
 
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The market retained its northward journey riding on global cues on June 27. The BSE Sensex rallied more than 400 points to 53,161 and the Nifty50 jumped over 130 points to 15,832, continuing uptrend for third consecutive session, backed by IT, metal, banks, auto and FMCG stocks.

The broader markets outperformed frontliners with the Nifty Midcap 100 and Smallcap 100 indices rising 1 percent and 2 percent on positive breadth. About three shares advanced for every declining share on the NSE.

India VIX, the fear index rose by 2.2 percent to 21.01 levels, which is not favourable for bulls. It has to fall below 20 mark for more stability in the market, experts said.

Stocks that were in action included City Union Bank and Persistent Systems which were the top gainers in the futures & options segment, while Carborundum Universal rallied sharply after a long time and extended uptrend for third straight session, forming double bottom kind of pattern in previous weeks.

City Union Bank jumped nearly 8 percent to Rs 137.25, Persistent Systems gained 6 percent at Rs 3,457, and Carborundum Universal rose 10.4 percent to Rs 751.5.

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Here's what Vidnyan Sawant of GEPL Capital recommends investors should do with these stocks when the market resumes trading today:

Carborundum Universal

On weekly charts, Carborundum Universal, prices have been moving in a strong uptrend since October 2020. After made a lifetime high in January 2022 prices started to correct. In the recent past, the Carborundum Universal showed a bounce back from the 50 percent retracement level of its prior advance from Rs 234.45 (October 2020) till Rs 1,035 (January 2022).

On daily chart it has formed higher top higher bottom formation with volume confirmation. On weekly chart, prices have given a breakout of 14 weeks EMA (exponential moving average) which was acting as a variable resistance to prices and also have managed to close above 5 weeks high.

The RSI (relative strength index) indicator is rising on the weekly time frame suggesting prices have strength into it for upside, currently RSI is placed at 48.5 level. Looking at the price action and the evidence provided by indicator we can see a pullback from the current levels which can drag the prices till Rs 850 levels.

We recommend traders and investors to hold this stock.

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Persistent Systems

On the weekly timeframe, Persistent Systems gave a breakdown of double top pattern with high volumes. Post breakdown the down move was followed by strong volumes, indicating further down move.

The 13 weeks EMA which was acting as a strong support to prices till April 2022, now it started to act as a resistance which is in sync with the breakdown.

RSI on the weekly Time frame is falling and sustaining below 50 mark (currently at 42.3) indicating bearish sentiments.

We recommend investors and traders to exit current long positions.

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City Union Bank

On weekly time frame, we can spot City Union Bank has been a laggard. The current prices on weekly timeframe are stuck in a broader range of Rs 110 – 145 levels.

Prices have given a breakdown from its crucial support level (Rs 146.85) in the December 2021. Post the breakdown we can spot change in the polarity of the prices.

Looking at RSI, it is sustaining near 50 mark, which indicates lack of momentum in the stock. The stock has upside potential till its immediate resistance and change in polarity level of Rs 146.85.

We recommend investors and traders to hold this stock.

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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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