Jigar S Patel of Anand Rathi suggests buying these three stocks on Nov 25

1:  Bajaj Finance:

Over the past 8-9 months, Bajaj Finance has been trading within a broad range of Rs 6,400- Rs 7,800, consolidating without a decisive trend. Recently, the stock found strong support near the Rs 6,400 level and has shown a reversal from this support zone accompanied by decent trading volumes, indicating renewed buying interest. 

 

In the previous trading session, it broke above the highs of the last four days, supported by a bullish divergence on the daily chart, which further strengthens the case for upward momentum. 

 

Considering these technical signals, a buying opportunity is identified in the Rs 6,650- Rs 6,700 range, with an upside target of Rs 7,350. A stop loss at Rs 6,300 on a daily closing basis is advised to manage risk.

 

2: Reliance Industries:

Reliance has been following a textbook Elliott Wave 5-wave structure on the daily chart since March 2023. This impulsive rally came to a decisive conclusion in July 2024, marking the end of the fifth wave and initiating a corrective ABC phase. Such corrections are typical after the completion of a 5-wave cycle and often retrace to significant Fibonacci levels. 

 

Currently, the ongoing correction appears to be approaching a critical support zone in the Rs 1,220- Rs 1,240 range, aligning with the 61.8 per cent Fibonacci retracement level of the entire 5-wave structure. This level holds importance as it typically serves as a strong support during corrective phases, indicating the potential for base formation. 

 

Moreover, these levels coincide with the completion of a bullish Crab harmonic pattern, further strengthening the case for a reversal.

  Given this confluence of technical indicators, traders can consider initiating long positions in the Rs 1,230- Rs 1,270 range, placing a protective stop loss below Rs 1,185 to manage risk. 

 

The anticipated upside target for this trade is around Rs 1,374, offering a favourable risk-to-reward ratio as the stock is poised to resume its upward trajectory following the correction.

3: Havells:

Since November 2023, Havells has been adhering to a classic Elliott Wave 5-wave structure on the daily chart. This impulsive rally concluded decisively in September 2024, marking the end of the fifth wave and transitioning into a corrective ABC phase. 

 

Such corrections typically follow a 5-wave cycle and often retrace to key Fibonacci levels. Currently, the correction is nearing a critical support zone between Rs 1,630- Rs 1,650, aligning with the 61.8 per cent -50 per cent Fibonacci retracement levels of the entire 5-wave rally. This zone holds significance as it often acts as a strong support during corrections, suggesting potential base formation. 

 

Additionally, the levels coincide with the completion of a double-bottom pattern accompanied by bullish divergence on the daily chart, further strengthening the likelihood of a reversal.

 

Given this confluence of technical signals, traders may consider entering long positions within the Rs 1,645- Rs 1,675 range. A protective stop loss below Rs 1,560 is recommended to manage risk, while the anticipated upside target is around Rs 1,825. This setup offers an attractive risk-to-reward ratio, with the stock positioned to resume its upward trajectory post-correction.

 

(This article is by Jigar S. Patel, sr. manager - equity research, at Anand Rathi. View expressed are his own.)