 "SBI Card, Laxmi Organic and GAEL among top bets by Jigar S Patel for today")
SBI Card
On a weekly chart, SBI Card's stock consolidated within a range of approximately Rs 680 to Rs 750, signaling a phase where the stock price remained confined within these levels, neither breaking down nor rallying. This period of consolidation occurred near a potential reversal zone, with the lower boundary of the consolidation being around Rs 680.
Such zones often indicate that the stock is nearing a point where its trend may shift, either resuming an uptrend or reversing from a prior decline.
During this consolidation, SBI Card formed a triple bottom pattern, a bullish reversal structure that indicates strong support at the lower end of the range. This pattern, coupled with bullish divergence on the daily Relative Strength Index (RSI), further reinforced the likelihood of an upward move. Bullish divergence on the RSI indicates that while the stock's price may have been declining or remaining flat, momentum was building in the opposite direction, suggesting growing buying pressure.
Such zones often indicate that the stock is nearing a point where its trend may shift, either resuming an uptrend or reversing from a prior decline.
During this consolidation, SBI Card formed a triple bottom pattern, a bullish reversal structure that indicates strong support at the lower end of the range. This pattern, coupled with bullish divergence on the daily Relative Strength Index (RSI), further reinforced the likelihood of an upward move. Bullish divergence on the RSI indicates that while the stock's price may have been declining or remaining flat, momentum was building in the opposite direction, suggesting growing buying pressure.
Following this consolidation, SBI Card successfully broke out of the Rs 750 zone and has sustained above it, confirming the strength of the breakout. The stock is now positioned for further upward movement, with a target price of Rs 900. Investors are advised to take a "buy on dip" approach, entering the stock at levels till Rs 770 for potential upside gains.
To manage risk, a stop-loss should be set at Rs 740 on a daily closing basis, ensuring downside protection in case the stock fails to maintain its momentum. This technical setup, backed by the triple bottom pattern, RSI divergence, and the breakout, makes SBI Card favorable long position for traders and investors.
Gujarat Ambuja Exports (GAEL)
Over the past year, Gujarat Ambuja Exports (GAEL) has established a robust support level within the range of Rs 130-132, undergoing multiple tests that have demonstrated its resilience in the face of downward pressure.
Recently, there has been a significant development as GAEL broke above a bearish trendline that had constrained its movement for the past 4-5 months, and notably, it has sustained this breakout.
This suggests a fundamental shift in market sentiment towards the stock. Furthermore, on the indicator front, the weekly Relative Strength Index (RSI) has surpassed its own bearish trendline, signalling bullish momentum in the short to medium term.
Considering these technical indicators, we have advised traders and investors to initiate long positions in GAEL within the range of Rs 140-144. We have set an upside target of Rs 174, indicating our bullish outlook on the stock's potential for appreciation. To manage risk, we recommend placing a stop-loss order near Rs 126 on a daily closing basis, aiming to protect against adverse movements in the market.
Recently, there has been a significant development as GAEL broke above a bearish trendline that had constrained its movement for the past 4-5 months, and notably, it has sustained this breakout.
This suggests a fundamental shift in market sentiment towards the stock. Furthermore, on the indicator front, the weekly Relative Strength Index (RSI) has surpassed its own bearish trendline, signalling bullish momentum in the short to medium term.
Considering these technical indicators, we have advised traders and investors to initiate long positions in GAEL within the range of Rs 140-144. We have set an upside target of Rs 174, indicating our bullish outlook on the stock's potential for appreciation. To manage risk, we recommend placing a stop-loss order near Rs 126 on a daily closing basis, aiming to protect against adverse movements in the market.
Laxmi Organic Industries
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Over the past 7-8 weeks, Laxmi Organic Industries has been trading within a relatively narrow range of approximately Rs 235-270, indicating a period of consolidation. However, the stock recently broke out of this range and is now positioned near the Rs 280-mark, signalling a potential shift in its trend.
This breakout is particularly noteworthy because it has also violated a bearish trendline that has constrained the stock's movement for nearly three years along with volume picking up. The length of time it took for this breakout to occur makes it a significant event, suggesting a potential change in the stock's long-term trend.
Additionally, the Relative Strength Index (RSI), a momentum indicator, has consistently remained above the 50 level throughout this period. This is a sign of strength, indicating that despite the consolidation, the stock has maintained positive momentum.
Considering these technical factors, we recommend taking a long position in Laxmi Organic Industries within the price range of Rs 305-310. The upside target is set at Rs 350, reflecting the potential for further gains following the breakout. To manage risk effectively, a stop-loss should be placed near Rs 286 on a daily closing basis.
(Disclaimer: Jigar S Patel is a senior manager of equity research at Anand Rathi. Views expressed are his own.)