Buy or Sell? TCS, Maruti, HUL among 7 Nifty stocks trading in oversold zone

These 7 Nifty 50 stocks are seen trading with an RSI below 30; stocks trading in an oversold zone need not necessarily bounce back immediately. Here are the key levels to watch out for.

The NSE Nifty 50 index has shed 7.7 per cent or over 2,000 points from its all-time high of 26,277, registered on September 27, 2024. The NSE benchmark index has traded with a negative bias for more than a month now, and was down 0.3 per cent in intra-day deals on Thursday.

 

In the process, the Nifty 50 index has broken below its short- and medium-term moving averages; namely the 20-, 50- and 100-DMA (Daily Moving Average). The NSE benchmark index has been quoting below its 100-DMA for the last 7 trading sessions.

 

Technically, the Nifty seems to have entered a short-term consolidation range with all eyes on the long-term moving average (200-DMA), now placed at 23,430.

 

That apart, the key momentum oscillators on the daily and weekly chart are exhibiting a mixed picture; with select indicators like the 14-day RSI (Relative Strength Index) and Stochastic Slow in near about oversold zone; thus raising hopes of a possible pullback in the near-term. 

 

The RSI, in particular, helps in identifying overbought and oversold conditions for a particular index of stock. The RSI is plotted on the chart on a scale from 0 to 100; a reading above 70 implies overbought condition, while a reading below 30 means oversold.

 

The 14-day RSI of Nifty 50 at present stands at 34.70; the RSI reading had recently hit a low of 28.60 on October 25. 

 

Meanwhile, among the Nifty 50 components; here are 7 such stocks trading in an oversold zone - meaning with an RSI below 30 as of today. The 7 Nifty 50 stocks are as follows - Dr. Reddy's, Hindustan Unilever, Tata Motors, IndusInd Bank, Maruti, Nestle and TCS.

 

Trading in an oversold zone does not necessarily mean that the stock could bounce back; it could also trade sideways or drift lower depending on how the other momentum oscillators are placed. 

 

Here's a technical analysis for these 7 stocks:

 

Dr. Reddy's

Current Price: Rs 1,250

Downside Risk: 12%

Support: Rs 1,230

Resistance: Rs 1,330

 

Dr.Reddy's stock is seen testing its 200-DMA for the last two trading sessions. The 200-DMA stands at Rs 1,254. The weekly chart shows presence of a key support around Rs 1,230 levels. As long as these support levels are respected, the stock can potentially bounce back to Rs 1,330 levels. On the flip side, break and sustained trade below the support levels can trigger a slide towards Rs 1,100. CLICK HERE FOR THE CHART

 

Hindustan Unilever (HUL)

Current Price: Rs 2,545

Downside Risk: 13.5%

Support: Rs 2,536; Rs 2,420

Resistance: Rs 2,725

 

HUL too is seen testing its 200-DMA on the daily scale, which stands around Rs 2,536. While some kind of a pull-back seems overdue; the upside for the stock is likely to be capped around Rs 2,725 levels. The stock will need to break and trade consistently above this level for the sentiment to turn favourable. On the downside, next major support for HUL stands at Rs 2,420 levels; below which a dip to Rs 2,200 seems possible. CLICK HERE FOR THE CHART

 

  Tata Motors

Current Price: Rs 838

Downside Risk: 12.8%

Resistance: Rs 900; Rs 915

 

Tata Motors stock has tumbled 29 per cent from its peak of Rs 1,179 in the last three months, and has been trading in near oversold zone in the entire month of October. The DI (Directional Index) is placed strongly in favour of the bears as the counter; hence the stock is facing persistent downward pressure. 

 

Going ahead, the stock seems on course to test its 100-WMA (Weekly Moving Average), which stands at 731. In case of a pullback, the stock is expected to face resistance around Rs 900 - Rs 915 levels. CLICK HERE FOR THE CHART

  

IndusInd Bank

Current Price: Rs 1,059

Downside Risk: 24.3%

Support: Rs 1,020

Resistance: Rs 1,140; Rs 1,250

 

IndusInd Bank stock is likely to face downward pressure as long as the stock trades below Rs 1,140. The overall bias is likely to remain tepid as long as the index sustains below Rs 1,250. On the downside, the recent low around Rs 1,020 is expected to act as an intermediate support; below which a dip towards its 200-MMA (Monthly Moving Average) placed at Rs 802 seems likely. CLICK HERE FOR THE CHART

 

  Maruti Suzuki

Current Price: Rs 11,150

Downside Risk: 9.2%

Resistance: Rs 11,700

 

Maruti stock has plunged nearly 16 per cent in October alone. The stock has given a fresh sell signal on the weekly scale, thus hinting towards a likely longer phase of consolidation. Chart suggests the stock could test its 100-WMA at Rs 10,130 on the downside. The near-term bias is likely to remain tepid as long as the stock remains below Rs 11,700. CLICK HERE FOR THE CHART

 

  Nestle India

Current Price: Rs 2,279

Upside Potential: 5.3%

Support: Rs 2,250

 

Nestle is seen trading sideways on the daily scale for the last few days, with select momentum oscillators now on the verge of showing a positive divergence. The bias for the stock is likely to be cautiously optimistic as long as the support at Rs 2,250 is held. On the upside, the stock can bounce to Rs 2,400 levels. CLICK HERE FOR THE CHART

 

  TCS

Current Price: Rs 1,680

Downside Risk: 13.1%

Support: Rs 1,640; Rs 1,620

Resistance: Rs 1,740; Rs 1,800

 

TCS has been consolidating in a narrow band of Rs 1,640 - Rs 1,740 for the last two weeks; below which near support for the stock exists at Rs 1,620. As long as these support levels are protected the stock can attempt a pull-back to Rs 1,800 levels. The broader trend suggests that TCS stock could dip towards 1,460 levels in the medium-term. CLICK HERE FOR THE CHART