 "RVNL, HAL: Is there more downside for Rail, Defence stocks post Budget?")
Shares of railway and defence related sectors bounced back in trades on Wednesday following the Budget Day drubbing. On Tuesday, stocks related to Indian railways and defence tanked up to 8 per cent after the Union Budget 2024 failed to enthuse investors.
Experts recommend there was very little focus on the Railways, which in the past, had been a key area of focus for the government. The Finance Minister Nirmala Sitharaman in her Budget speech made no sector specific allocation for Railways.
Whereas, in case of the defence sector, the finance minister allocated Rs 6.21 lakh crore - up 4.8 per cent when compared with the allocation for FY24.
Meanwhile on the bourses on Wednesday morning, RailTel Corporation of India had surged 5 per cent to Rs 516. Jupiter Wagons, IRCTC, IRFC, RVNL (Rail Vikas Nigam), Ircon International, Titagarh Wagons and RITES gained 1-3 per cent each.
In the defence segment, Apollo Micro Systems surged 5 per cent to Rs 117. Sika, IdeaForge, Hindustan Aeronautics, Taneja Aerospace, Midhani, Data Patterns, Bharat Electronics and Bharat Dynamics were up 1-2 per cent each.
Against this background, will the shares of rail and defence witness more downside in the near-term or will these high flying sectors continue their winning run on the bourses. Here's what the charts suggests:
RVNL
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Current Price: Rs 600
Downside Risk: 11.2%
Support: Rs 558
Resistance: Rs 616; Rs 645
RVNL stock seems to be precariously placed on the daily chart, with price-to-moving averages action remaining favourable and select momentum oscillators showing negative crossover.
To simply things, the stock needs to sustain above Rs 616 levels on a weekly closing basis for the current uptrend to continue. Meanwhile, the daily chart shows near support for the stock around 558 levels, below which it can test its 20-DMA (Daily Moving Average) support around Rs 533 levels.
The long-term bias for the stock is likely to remain positive as long as the stock holds above its breakout price of Rs 490. On the upside, the recent highs around Rs 645 levels will act as a resistance for the stock.
IRFC
Current Price: Rs 197
Downside Risk: 7.6%
Support: Rs 193; Rs 186
Resistance: Rs 207; Rs 210
IRFC stock hit the 20 per cent lower circuit in Tuesday's intra-day deals, but eventually ended 5 per cent lower. In the process, the stock managed to sustain above its 20-DMA. The near-term bias for the stock is likely to remain cautiously optimistic as long as IRFC holds above Rs 193 levels. Near support for the stock is visible at Rs 186.
With select key momentum oscillators showing negative crossovers on the daily and weekly charts; the stock may witness some downward pressure in the near-term. As such, the stock may test support around its 50-DMA at Rs 182.
On the upside, the stock will need to cross and sustain consistently above Rs 207 and Rs 210 resistance zone for the up move to resume.
Jupiter Wagons (JWL)
Current Price: Rs 642
Downside Risk: 17.9%
Support: Rs 593
Resistance: Rs 670; Rs 700
JWL stock has plunged over 22 per cent from its high of Rs 748 hit on July 05 to a low of Rs 581 on the Union Budget day. Further, the stock has witnessed a downward breakout on the daily scale last week.
Hence, the stock is likely to trade with a negative bias as long as the stock remains below Rs 670 - Rs 700 levels.
On the downside, sustained trade below the key support at Rs 593 shall add additional pressure on the stock. Following which, a fall towards its 20-WMA (Weekly Moving Average) at Rs 527 seems likely.
Hindustan Aeronautics (HAL)
Current Price: Rs 4,940
Downside Risk: 17%
Support: Rs 4,700
Resistance: Rs 5,070; Rs 5,300; Rs 5,475
HAL stock is seen trading below its 50-DMA for the fourth straight trading session. The stock has shed almost 20 per cent from its high of Rs 5,580. As the stock has broken key supports on the daily scale, the stock seems to be on course to test support around its 20-WMA at Rs 4,100 levels. Interim support for the stock can be expected around Rs 4,700 levels.
For now, the stock is likely to remain tepid as long as it trades below the 50- and 20-DMA placed at Rs 5,070 and Rs 5,300 levels. On the upside, next key hurdle for the stock is seen at Rs 5,475.
Bharat Electronics
Current Price: Rs 304
Upside Potential: 11.8%
Support: Rs 298
Resistance: Rs 318
Bharat Electronics is seen trading below its 20-DMA for the last four trading sessions. The stock is somehow managing to hold support around its 50-DMA, which stands at Rs 298.
The stock, however, needs to claw its way back above the 20-DMA, which stands at Rs 318, in order to regain strength. Key momentum oscillators are mixed on the daily scale, hence a pullback to Rs 340-odd levels cannot be ruled out at the counter.
Bharat Dynamics (BDL)
Current Price: Rs 1,460
Downside Risk: 14.4%
Support: Rs 1,445
Resistance: Rs 1,490; Rs 1,600
BDL stock is seen testing support around the lower-end of the Bollinger Bands on the daily scale at Rs 1,445 levels. Break and close below the same can provide added impetus to the bears.
As such, the stock could then slide towards its 20-WMA at Rs 1,250 levels.
On the other hand, the stock will need to cross the 50-DMA and 20-DMA hurdles at Rs 1,490 and Rs 1,600 in order to revive the sentiment at the counter.