Trade Spotlight | What should you do with Amara Raja, Sun Pharma Advanced Research, Poly Medicure on Monday?

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Recovery in last hour of trade after volatility helped the benchmark indices snap two-day losing streak and closed with moderate gains on November 4. Positive global cues lifted the sentiment for investors and traders.

The BSE Sensex climbed more than 100 points to 60,950, and the Nifty50 jumped over 60 points to 18,117 and formed a decent bullish candle on the daily charts, indicating a continuity in momentum, though there was a mixed trend in the broader market.

The Nifty Midcap 100 index was down 0.25 percent, and Nifty Smallcap 100 index gained four-tenth of a percent. The market breadth was in favour of bulls as about 1,110 shares advanced against 863 declining shares on the NSE.

The volatility index India VIX also cooled down below 16 mark, giving a comfort to bulls. India VIX was down by 1.8 percent at 15.66 levels.

Stocks that were in action included Amara Raja Batteries which surged nearly 10 percent to Rs 569.4, the highest closing level since April 22 this year, and formed bullish candle on the daily charts with large volumes. It also had a strong gap up opening for the stock and also it gave a close above the previous biggest candle on February 24.

Sun Pharma Advanced Research Company shares rallied 6 percent to Rs 260.75, the highest closing level since May 2 this year and formed long bullish candle on the daily charts with above average volumes. In fact, Friday’s bullish candle engulfed previous three days’ red candles.

Poly Medicure was also in focus, rising 5 percent to Rs 952.5 and formed big bullish candlestick pattern on the daily charts with strong volumes. In fact, it has seen a breakout of downward sloping resistance trend line adjoining several points from the October high.

Here’s what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today:

Amara Raja Batteries

The free fall started from January 2021 till June 2022, resulting in a 56 percent cut in the counter. On a monthly scale, it has formed an Inverted Hammer near the 0.786 retracement level of its previous up move started post covid. It has given a 11 percent return in the current month after hitting a low of Rs 437 in June 2022.

On the indicator front, monthly MACD (moving average convergence and divergence) is about to make a bullish crossover along with monthly RSI (relative strength index) making an impulsive structure near the oversold zone of 32 levels hinting at more upside in the said counter.

One can buy at current levels in small tranches and another at Rs 530-540 levels (if again tested). The upside is seen till Rs 650 and credible support is seen around Rs 510.

Sun Pharma Advanced Research Company

It is a classic case of volume spread analysis. If we closely look at the monthly chart then the rally which started from April 2021 till September 2021 saw humongous volume. This clearly states that smart money was behind this buying.

What is more interesting is that since then counter saw a 51 percent cut in price with almost slim volume (according to Volume Spread analysis which states that any correction in stocks with slim volume is just a technique used by smart money to wipe out retailers’ position).

On the monthly chart, there is a Hammer along with pair of Dojis’ which hints towards further upside in the counter.

From an indicator perspective monthly, RSI has formed double bottom near Rs 45 levels. One can buy at current market price with an upside target of Rs 320 with plausible support at Rs 230.

Poly Medicure

On the weekly chart, Poly Medicure has been making higher highs and higher lows for the last couple of months. Also, volume is picking up on a daily basis which is complementing its up move.

From the indicator perspective, the weekly average directional index is placed at 26.61 which further confirms the upside in the counter.

One can buy in small tranches at current levels. The upside is expected till Rs 1,080 with support at around Rs 890.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.