 "CDSL, Allcargo, Minda Corp: These 5 overbought stocks can fall up to 13%")
The NSE Nifty 50 index and the BSE Sensex have rallied over 4 per cent their August month lows in the last three weeks. Similarly, the Nifty MidCap, SmallCap and the broader Nifty 500 indices have gained in the range of 4.3 - 6.2 per cent from their respective lows this month.
Similarly, as we near the end of August month, several stocks have delivered double-digit returns thus far. PCBL with a gain of 49 per cent is the top mover followed by Godfrey Phillips (up 35 per cent).
Among others, Minda Corporation, PB Fintech (PolicyBazaar), Poly Medicure, Central Depository Services (India) (CDSL), Inox Wind, Himadri Speciality Chemical, Angel One, Oil India and Triveni Turbine have rallied over 20 per cent each.
Amid the market rally, several stocks are now seen trading in overbought conditions basis on the RSI (Relative Strength Indicator). The 14-day RSI is plotted taking into consideration the price action of the underlying index/stock for the last 14 trading sessions. For instance, if the stock has risen in the last 14 days, the 14-day RSI will read 100, whereas in case of the reverse the RSI will read 0.
Technically, a RSI reading above 70 is considered overbought, while a reading below 30 is considered as oversold. Trading in overbought zone necessarily does not mean that a stock could fall, but caution needs to be exercised. Specially, if divergence is observed in other key momentum oscillators.
Here we have selected 5 such stocks that at present trade in overbought zone and can potentially correct or fall from here on:
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Minda Corp
Current Price: Rs 610
Downside Risk: 12.8%
Support: Rs 595; Rs 553
Resistance: Rs 613; Rs 630; Rs 645
After a breakout on August 23, Minda Corp stock today is seen trading below its immediate support of Rs 613 levels in intra-day deals. The 14-day RSI too has dropped from a high of 84.7 to 72.7 levels in the last three days. Further, the MACD (Moving Average Convergence-Divergence) is showing more-than-average expansion; hence may converge in the coming trading sessions.
As such, Minda Corp may face some resistance around Rs 630 and Rs 645 levels in the near-term. On the downside, the stock may look to seek support around its super trend line at Rs 553, below which a dip towards its 20-DMA (Daily Moving Average) around Rs 532 level seems likely. Interim support for the stock can be expected around Rs 595. CLICK HERE FOR THE CHART
Allcargo Logistics
Current Price: Rs 70.40
Downside Risk: 8.2%
Support: Rs 67
Resistance: Rs 72.50; Rs 75.50; Rs 77.60
Allcargo Logistics stock has been trading below the key moving averages since March 2024. The recent pullback has seen the stock cross the short-term moving averages and test its 200-DMA, which stands at Rs 72.50. Further, the weekly chart shows presence of a key hurdle at Rs 77.60 - in the form of 100-WMA (Weekly Moving Average).
For now, on the weekly scale the stock is seen attempting to break above its 20-WMA, which stands at Rs 72.80. Similarly, on the monthly scale resistance for the stock is visible at Rs 75.50 - in the form of 20-MMA (Monthly Moving Average).
Given, the presence of multiple overhead resistances, the stock may consolidate around higher levels before possibly breaking out. As such, the stock may dip to test its 100-DMA support at Rs 67; below which a fall to Rs 64.60 level seems likely. CLICK HERE FOR THE CHART
Central Depository Services (CDSL)
Current Price: Rs 1,504
Downside Risk: 10.2%
Support: Rs 1,488; Rs 1,440
Resistance: Rs 1,570; Rs 1,585
CDSL has witnessed a negative crossover on the RSI indicator, with it falling below the signal line. Further, the stock price too has dipped below its higher-end of the Bollinger Bands on the daily scale.
As such, the stock is expected to face resistance around Rs 1,570 to Rs 1,585 levels in the near-term. On the downside, near support at Rs 1,488 holds the key; break and sustained trade below the same can trigger a fall towards Rs 1,390 - Rs 1,350 levels. Interim support can be expected around Rs 1,440 levels. CLICK HERE FOR THE CHART
ICICI Lombard General Insurance
Current Price: Rs 2,128
Downside Risk: 7.2%
Support: Rs 2,080; Rs 2,050
Resistance: Rs 2,135; Rs 2,155
ICICI Lombard General Insurance has clocked gains for the last 13 straight weeks, with the stock up 35 per cent during the period. The 14-day RSI is seen quoting atop 83 levels; with Slow Stochastic and MACD too in fairly overbought territory. The stock is treading along the higher-end of the Bollinger Bands at Rs 2,135 levels. CLICK HERE FOR THE CHART
As per the monthly Fibonacci chart, the stock is trading close to its monthly hurdle at Rs 2,155. Failure to overcome the same can trigger a phase of consolidation or correction at the counter. As such, the stock may fall towards its 20-DMA at Rs 2,010 or Rs 1,975 levels; with interim support seen around Rs 2,080 and Rs 2,050 levels.
Vijaya Diagnostic Centre
Current Price: Rs 920
Downside Risk: 7.6%
Support: Rs 910; Rs 885
Resistance: Rs 930; Rs 940
Vijaya Diagnostic Centre is broadly seen consolidating in the Rs 885 - Rs 940 trading band; with interim support seen at Rs 900 and resistance at Rs 930. On the weekly scale, key support for the stock stands at Rs 910.
Given the overbought conditions on key momentum oscillators, break and sustained trade below Rs 910, can trigger a potential fall towards Rs 850 levels, the chart suggests. CLICK HERE FOR THE CHART
