Trade Spotlight | How to deal in REC, United Spirits, Ajanta Pharma today

Expert suggests trading strategy on these 3 stocks

Technically, the 21,950 mark, which coincides with the 21-day EMA (exponential moving average), seems to be acting as a support for the Nifty 50, hence, as long as this level holds, the upward journey towards 22,200-22,300 can't be ruled out in coming sessions of new monthly series, March. The next support is expected at 21,850, experts said, adding that the major upside is possible only after a decisive close above 22,300.

On February 29, the expiry day for February futures and options contracts, the benchmark indices turned positive in late trade after volatility. The Nifty 50 rose 32 points to 21,983 and formed a bullish candlestick pattern with higher upper and lower shadows on the daily charts.

The BSE Sensex climbed 195 points to 72,500, while the Nifty Midcap 100 index gained half a percent and Smallcap 100 index was up 0.6 percent.

Stocks that recorded better performance than broader markets included REC, United Spirits, and Ajanta Pharma. REC rebounded with 3.6 percent gains at Rs 442 after recent correction and formed bullish candlestick pattern on the daily charts with above average volumes. The 50-day EMA (exponential moving average placed at Rs 445) is crucial to watch in the coming session.

United Spirits ended almost near at new closing high seen on February 23 (Rs 1,166.05), and climbed 2.5 percent to Rs 1,165.85. The stock has formed long bullish candlestick pattern, which resembles Bullish Engulfing kind of pattern on the daily charts (though not at the bottom), with above average volumes, while it traded above all key moving averages.

Ajanta Pharma has formed robust bullish candlestick pattern and engulfed all the previous three weeks' candles in single session. The stock rallied nearly 6 percent to Rs 2,208 with above average volumes, and traded above all key moving averages.

Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:

REC

After a short-term price correction, the stock is available near its multiple support zone and it has formed tweezer bottom candlestick pattern. The decent volume activity near support zone indicates that the downside is restricted.

Therefore, the stock is expected to rebound and witness the bullish momentum from the current levels with a favourable risk and reward perspective. Unless it is trading below Rs 428, positional traders can retain an optimistic stance and look for a target of Rs 475.

United Spirits

On the weekly scale, the counter is into a rising channel chart formation with a higher low series pattern. The technical indicators like ADX (average directional index) is also indicating further up trend from current levels, which could boost the bullish momentum in coming horizon.

As long as the stock is trading above Rs 1,130 the uptrend formation is likely to continue. Above which, the counter could move up to Rs 1,250. On the flip side, fresh sell off possible only after dismissal of Rs 1,130.

Ajanta Pharma

After the robust rally on the weekly scale, the stock went into the consolidation mode. However, the recent breakout in the stock is representing a bullish continuation pattern signifying a new leg of up move from the current levels.

For positional traders, Rs 2,090 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 2,320. However, if it closes below Rs 2,090, traders may prefer to exit from trading long positions.