Buy and Sell ideas: Top technical picks by ICICI Securities for May 21

Market outlook

Going ahead, we reiterate our positive stance and expect the Nifty to challenge all time high of 22,800 in coming weeks. In the process, volatility would remain high as expectations related to the General election outcome would have bearing on market direction in the upcoming truncated week. Thus, capitalise dips as an incremental buying opportunity to ride the next leg of up move.

Stock recommendations:

Buy Reliance in the range of Rs 2,820-2,875 for the target of Rs 3,270 with a stop loss of Rs 2,730; Time frame: 3 months

Technical view: Reliance Industries, proxy of Oil & Gas and Telecom, both outperforming sectors, has been in structural uptrend since its early CY24 breakout from 28-month consolidation. Current mean reversion to its 100-days ema offers fresh entry opportunity

 

Key point to highlight is that, since November 2023 stock has been holding above its 100-days EMA on multiple occasions. In the current scenario also, stock underwent shallow retracement as supportive efforts emerged from rising 100-day EMA coinciding with 61.80 per cent retracement of Jan-Mar up move (Rs 2,645-3,026) resulting in higher bottom formation

We expect share price to head towards Rs 3,270 being the price parity of Jan-Mar rally (Rs 2,568-3,024) projected from May lows of Rs 2,768.

Buy Larsen & Toubro in the range of Rs 3,400-3,460 for the target of Rs 3,735 with a stop loss of Rs 3,108; Time frame: 3 months

Technical view: Capital goods sector has been a key outperformer over the past year or more and continues to lead in CY24 as well. L&T, leader in construction space, is a good proxy play on Capex cycle, construction and defence space. 

Technically, after recent correction of about 16 per cent off life highs share price has approached long-term rising 200-dema, making a good candidate to buy over medium term within large cap space

Structurally, share price has retraced its November 23-April-24 rally (Rs 2,856-3,860) by 61.8 per cent and expected to form a higher base around long term 200-day average coincided with long-term rising trend line, which has been held since CY22 on multiple corrections. 

Stock is maintaining its rising peak and trough formation on medium degree charts reinforcing positive stance and a good candidate to buy at current juncture

We expect share price to resume its uptrend along with index and rally towards Rs 3,735 over next few months as it is 80 per cent retracement of April-May decline (3860-3225)

(Dharmesh Shah is a head technical analyst at ICICI Securities. Views expressed are his own.)