Given the circumstances, three stocks have formed a strong setup on the technical charts giving an attractive risk-to-reward ratio.
Analyst: Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy
Mahanagar Gas Limited (MGL) – All-Time High Breakout
MGL made a high of Rs 1377 in October 2017; since then, the stock has been trading below it. 1300 was a strong resistance for the stock which it tried to break thrice but failed.
Last week MGL broke this level with a good volume. The stock even corrected to retest the breakout level confirming the breakout. However, the daily RSI for the stock is 73 so a consolidation can not be ruled out.
On the derivative front, huge put writing is seen on strike prices even above the ATM level depicting its bullishness.
Thus, MGL can be bought for a target price of 1450. The stop loss would be at 1255 on a closing basis.
Godrej Consumer Products- Cup and Handle Breakout
Godrej Consumer Products made a high of Rs 1131 in September 2021. But the stock corrected and had been trading below this level since then. The level of 1100 was a strong resistance for the stock which was broken this month.
Now, the stock is correcting to retest the breakout level and sustaining above it. On the weekly time frame, the stock has formed a bullish rejection hammer candlestick.
The max pain for the stock stands at 1140 depicting the conviction of the buyers. The correction offers a very good risk-to-reward ratio.
Thus, Godrej Consumer Products can be bought for a target price of 1230 and the stop loss would be 1095 on a closing basis.
Apollo Hospitals – Rounding Bottom Pattern Breakout
The level of Rs 6000 was the all-time high that Apollo Hospitals made in November 2021. On Friday, this level was broken with good volumes forming a rounding bottom pattern.
The daily and the weekly RSI for the stock is 74 and 76 respectively so the stock may witness some correction in the near future. But, the strength of the breakout suggests the stock has a good probability of continuing its uptrend.
Option chain analysis for the stock increases open interest with the price. The max pain for the current month stands at 5900 showing a limited downside movement from here.
Thus it is recommended to buy Apollo Hospitals for a target price of 6500 and a stoploss of 5890 on a closing basis.
Agencies
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