Buy ideas for May 30: Metro Brands, Divi's Labs; check target prices

Metro Brands

Since April 2024, Metro Brands has been trading within a consolidation range of approximately Rs 1,020 to Rs 1,120. Recently, Metro Brands has broken out of this consolidation range, surpassing the upper limit of Rs 1,120, and maintaining its position above this level. 

This breakout is a significant event as it suggests a potential shift in market sentiment and the beginning of a new upward trend. Additionally, technical indicators provide further bullish signals: the weekly stochastics, which are used to identify overbought or oversold conditions, have shown a bullish divergence and a bullish crossover. 

A bullish divergence occurs when the stock price reaches new lows while the stochastic oscillator makes higher lows, indicating weakening downward momentum. A bullish crossover happens when the faster stochastic line crosses above the slower line, suggesting a potential increase in buying pressure. 

 

These indicators make the stock appear attractive for investors. Therefore, it is recommended to buy Metro Brands in the price range of Rs 1,135 to 1,155. The target for this trade is set at Rs 1,300, reflecting the expected upside potential. To manage risk, a stop-loss should be placed near Rs 1,068, meaning if the stock closes below this level on a daily basis, the position should be exited to prevent further losses.

Divi’s Labs

In the current month, Divi’s Labs has surpassed its historical peak, which ranged between Rs 3,920 and Rs 4,075, a level it had reached during 2022 and 2024. This breakthrough is significant as it indicates the stock has overcome previous resistance levels and is now positioned for potential further gains. 

The fact that Divi’s Labs has managed to sustain its price above this range reinforces the likelihood of continued upward momentum. From a technical analysis perspective, the weekly stochastic oscillator, which helps identify overbought or oversold conditions, has reversed direction at the 55 level and has shown a bullish crossover. 

This crossover occurs when the shorter-term stochastic line crosses above the longer-term line, suggesting increased buying pressure and supporting a bullish outlook. Based on these observations, it is recommended to take a long position in Divi’s Labs within the price range of Rs 4,375 to Rs 4,465. The target for this trade is set at Rs 5,000, reflecting the anticipated upward potential. To manage risk, a stop-loss should be placed at Rs 4,100, ensuring that the position is exited if the price falls below this level to mitigate potential losses.

Tanla Platforms 

Since May 2024, Tanla Platforms has been trading within a consolidation range of approximately 880 to 910. This period of fluctuation without a clear trend indicated a balance between buying and selling pressures. Recently, however, Tanla Platforms has broken out of this range, moving above the 910 level, and sustaining its upward momentum. This breakout is a positive signal, suggesting the stock may be entering a bullish phase.

From a technical perspective, the daily stochastics, which measure the stock's momentum, have shown a bullish crossover. This occurs when the short-term stochastic line crosses above the long-term line, signalling increased buying interest. Importantly, this crossover happened near the oversold territory, implying the stock was excessively sold and might be poised for a rebound. These stochastic readings enhance the stock's appeal to potential buyers.

Based on these technical indicators, it is recommended to buy Tanla Platforms within the price range of Rs 920 to Rs 940. The target for this trade is set at Rs 1,020, indicating significant profit potential as the stock moves higher. To manage risk, a stop-loss should be placed near Rs 880, ensuring that if the stock closes below this level on a daily basis, the position will be exited to avoid further losses.

(Jigar S Patel is a senior manager of equity research at Anand Rathi. Vows expressed are his own.)