HDFC Securities recommends these two stocks to buy on dips

By Nagaraj Shetti

Nifty Observation: After shifting into a narrow range movement in the last couple of sessions, Nifty showed high volatility of up and down swings on Wednesday and closed the day lower by 18 points.

A small positive candle was formed on the daily chart with a gap-down opening and with an upper shadow. Technically this pattern indicates broader range movement in the market near all-time highs. The smaller degree positive pattern like higher tops and bottoms is intact as per the daily chart and the present weakness could be in line with the new higher bottom of the sequence. Hence, any weakness from here could be a buy-on-dips opportunity.

Conclusion: The near-term uptrend of Nifty remains intact and a decisive move above 22550 is likely to pull Nifty towards the next crucial hurdle of 22800 levels in a quick period of time. Immediate support is at 22300 levels.

1. Buy HUDCO- (CMP Rs 201.55)

The weekly timeframe chart of this housing development corporation stock-HUDCO indicates a reasonable upside bounce since last week. After shifting into a downward correction amidst larger range movement in the last couple of months, the stock price is currently placed at the edge of moving above the said range around Rs 198-200 levels. The stock price on the smaller timeframe has moved above the hurdle of down sloping trend line around Rs 195 levels. The volume has started to expand during the upside breakout in the stock price and the weekly 14-period RSI shows a positive indication.

Buying can be initiated in HUDCO at the current market price of Rs 201.55, add more on dips down to Rs 195, wait for the upside targets of Rs 220 and Rs 238 in the next 3-5 weeks. Place a stoploss of Rs 188.

2. Buy ICICIPRULI – (CMP Rs 622.10)

The weekly timeframe chart of this life Insurance company stock-ICICI Prudential Life Insurance signals sharp up-trended movement. The stock price has moved above the crucial resistance of around Rs 600-605 levels and is currently trading higher. Positive chart patterns like higher tops and bottoms are observed on the weekly chart. The present upmove seems to be in the process of new higher top formation of the pattern. Volume has started to expand during the upside breakout in the stock price and the daily 14-period RSI has moved above the upper 60 levels.

One may look to buy ICICI Prudential Life Insurance at the current market price of Rs 622.10, add more on dips down to Rs 601 and wait for the upside targets of Rs 674 and Rs 725 in the next 3-5 weeks. Place a stoploss of Rs 581.

(Nagaraj Shetti is a Technical Research Analyst with HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)