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Last Updated : May 15, 2019 11:11 AM IST | Source: Moneycontrol.com

'Auto sector at its bottom; three stocks to trade on technicals'

Most stocks comprising the auto sector show strong support signs this week. They include Maruti Suzuki, Tata Motors and Hero MotoCorp

Moneycontrol Contributor @moneycontrolcom
 
 
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Vishal Malkan

Nifty retreated from the resistance levels of 11,800, a much-anticipated dip. The index formed a big black candle last week that halted at 11,300, a few points away from the support of 11,240. While the RSI on the weekly chart has fallen below 60, which is the resistance zone for the bears, RSI on monthly chart still seems to be taking support at these levels.

The price gap of last week has created an important resistance zone, which could make it difficult for Nifty to cross over for some time soon. The Bank Index followed suit, albeit with a softer glide, thanks to the respite from the move by SBIN. The down move on this index could halt in the coming days, considering that the RSI on the daily chart is at the support zone of 40.

With most sectors are reeling under the pressure of the bears taking control over the indices, there is one sector that seems to have been done with its down move—auto. Most stocks comprising the auto sector show strong support signs this week. They include Maruti Suzuki, Tata Motors and Hero MotoCorp. Study the charts given below.

Maruti Suzuki – Weekly Chart

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The price in the weekly chart of Maruti has been taking multiple supports at Rs 6,500. The RSI too has taken support at 40, which is a support zone for the bulls.

Tata Motors – Weekly Chart

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The price is taking support on 20-week simple moving average – a very powerful technical support zone. The RSI had also taken support at 40 when the price formed a higher bottom last month.

Hero MotoCorp – Weekly Chart

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Hero Moto is displaying positive divergence on the RSI while making multiple bottoms around Rs 2,500 on weekly charts. This could be a good support zone once the price bounces.

With important price levels to support them and the low-risk trading opportunity offered, these stocks from the auto sector can be traded on the long side with the short risk for an up-move of about 6-9 percent from these levels.

The author is Founder of MalkansView.

Disclaimer: The views and investment tips expressed by 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.

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First Published on May 15, 2019 11:11 am
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