Buy these two stocks for next one month; charts show strong support as Nifty reverses downtrend

February 25, 2021 10:50 AM

Technically, with the Nifty bouncing back strongly after the recent correction, the bulls seem to have made a comeback.

Nifty 50, Rain Industries, ABFRLOn the 15 minute intra charts, the Nifty has reversed its recent downtrend by convincingly crossing its recent intraday swing highs. Image: Reuters

By Subash Gangadharan

Technically, with the Nifty bouncing back strongly after the recent correction, the bulls seem to have made a comeback. Zooming into the daily charts, we can see that the index is holding above the previous intermediate highs of 14754. We can therefore see the change of polarity principle at work. Previous resistances are now acting as support.

On the 15-minute intra charts, the Nifty has reversed its recent downtrend by convincingly crossing its recent intraday swing highs. Further upsides are likely once the immediate resistance of 15010 is cleared.

In this scenario the Nifty could again attempt to move towards its life highs of 15432. Downside supports to watch for resumption of weakness are now at 14723.

The below picks are for the next 15-26 trading sessions

Buy Rain Industries

After correcting from a high of 475 touched in January 2018, Rain Industries found support around the 44 levels in March 2020. These levels roughly correspond to previous major highs of the stock tested in 2015, implying the change in polarity principle at work.

The stock has since then rebounded and gradually made higher tops and higher bottoms over the last several months. On Wednesday, the stock broke out of its recent intermediate highs of 156.6 on the back of healthy volumes, indicating that the uptrend looks set to continue.
Technical indicators are giving positive signals as the stock is trading above the 20 and 50 day SMA and medium term momentum indicators like the 14-week RSI are in rising mode and not extremely overbought.

With the intermediate and long term technical setups too looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 160-171 levels. CMP is 169. Stop loss is at 150 while targets are at 210.

Buy Aditya Birla Fashion and Retail Ltd

ABFRL has recently bounced back from the 200 day EMA and been consolidating in a range. On Wednesday, the stock broke out of a narrow range on the back of above-average volumes. This augurs well for the uptrend to continue.

Technical indicators are giving positive signals as the stock trades above the 20-day and 50-day SMA. Intermediate momentum readings like the 14-week RSI too are in rising mode and not overbought.

With the short term and intermediate technical setups looking attractive, we expect the stock to gradually move higher in the coming weeks. We, therefore, recommend a Buy between the 178-184 levels. CMP is 182. Stop loss is at 168 while targets are at 210.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)

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