Buying Ideas for August 5: Asian Granito, IDFC First Bank, Borosil Renewables
Asian Granito India
Asian Tiles has recently confirmed a significant breakout from a long-standing descending trend line, which crossed the Rs 86 mark. This trend line breakout indicates a possible shift in the price trajectory of the stock, signaling the end of a downtrend and the possible beginning of an upward movement.
In addition to this technical signal, the stock has formed a pattern that resembles a bullish head and shoulders. This pattern is generally considered a reliable indicator of a reversal from a downtrend to an uptrend.
The breakout and pattern formation are supported by increased trading volumes, indicating strong buying interest, and the positive alignment of momentum oscillators, reflecting increasing bullish momentum.
Considering these positive technical indicators, traders are advised to buy Asian Tiles within the price range of Rs 88 to Rs 84. To manage risk, a stop loss should be placed at Rs 76 on a closing basis. The expected price targets for this trade are Rs 101 and Rs 106, which are expected to be reached within the next 1 to 3 months.
Borosil renewable energy sources
The stock is in a consolidation phase and has been consistently trading above its 200-day exponential moving average (DEMA) around Rs 480 for the past few months. This period of sideways movement indicated a phase of indecision or accumulation among market participants.
However, the stock has recently experienced a breakout from this range, indicating a potential shift in market sentiment and momentum. This breakout is further validated by a positive moving average crossover, indicating increasing bullishness.
Additionally, a chart pattern has formed that resembles an inverse head and shoulders, which is typically considered a bullish reversal pattern. This combination of technical indicators suggests strong potential for upward movement.
Therefore, traders are advised to buy Borosil Renewables within the price range of Rs 544 to Rs 536, with a protective stop loss set at Rs 480 on a closing basis. The expected targets for this trade are Rs 630 and Rs 660, which are expected to be reached in the next 1 to 3 months.
IDFC First Bank
After peaking at around Rs 101 in September 2023, the stock underwent a significant correction, falling 30 points, which is a decline of 29.34 percent from its high. This fall took the stock to a support level near the 0.618 Fibonacci retracement level of its previous uptrend, which was from Rs 53 to Rs 101.
The 0.618 retracement level is often considered a critical support level in technical analysis, indicating a potential reversal point. A bullish bat pattern has also formed at this level, which is a harmonic pattern that usually signals a potential bullish reversal.
The confluence of these technical indicators – support at the key retracement level and the formation of the bullish bat pattern – suggests that current price levels are favorable for buying.
Hence, it is recommended to buy the stock within the range of Rs 72-75, with a target price of Rs 84. To manage risk, a stop-loss should be set at 68.5 on a daily basis. This strategy aims at capitalizing on the expected reversal and subsequent upward movement based on the identified technical signals.
(Jigar S Patel is a senior manager of equity research at Anand Rathi. The views expressed are his own.)
First print: Aug 05, 2024 | 06:43 AM IST