Lodha Developers
After reaching a peak near the Rs 1,590-mark on July 10, 2024, the stock has experienced a significant decline, shedding nearly 450 points, which translates into an approximate 28 per cent drop in price.
This substantial correction has brought the stock down to a crucial technical level, where it has now formed a triple bottom pattern near the 200-day Exponential Moving Average (DEMA).
A triple bottom typically signals strong support and suggests a potential reversal from a bearish to a bullish trend. Additionally, the presence of a Bullish Bat pattern, combined with the violation of a bearish trendline, further strengthens the outlook for a positive shift in momentum.
These technical indicators suggest that bullish momentum could build in the coming weeks. Therefore, from a strategic perspective, investors could consider buying or accumulating the stock in the price range of Rs 1,250-1,300, targeting an upside of Rs 1,540. However, it’s crucial to implement a stop-loss at Rs 1,140 on a daily closing basis to manage risk in case of any unfavourable movements.
IDFC First Bank
Over the past few months, IDFC First Bank has consistently maintained a strong support level between Rs 70-71, despite several challenges from downward market trends.
This price range has been tested multiple times, showcasing its ability to hold firm against selling pressure. Recently, a bullish divergence has emerged on the daily chart, which is a key technical indicator suggesting a potential upward reversal in the stock’s price. The importance of this support level is further emphasised by the fact that it aligns with the 0.618 Fibonacci retracement level of its previous upward move. This alignment strengthens the case for the stock being an attractive buy at the current price levels.
Based on these technical signals, we recommend traders and investors consider initiating long positions in IDFC First Bank within the Rs 72-73 price range. Our analysis indicates a potential upside target of Rs 90, highlighting a positive outlook on the stock’s growth prospects.
However, to mitigate potential risks, we advise placing a stop-loss order at Rs 64 (on a daily closing basis).
Allcargo Logistics
Recently, Allcargo Logistics has formed a bullish Bat pattern, which is a harmonic chart pattern known for indicating potential reversals. This pattern emerged after the stock created a triple bottom structure near its historical low of Rs 61, which is a strong sign of price support.
The triple bottom pattern typically signifies that the stock has tested a key support level multiple times, failing to break below it, which suggests that the downward momentum is weakening. Additionally, a bullish divergence was observed just before the stock reversed from the Rs 61 level, where the price made a lower low, but the momentum indicator (such as the RSI or MACD) showed a higher low.
This divergence is a classic signal that the downtrend might be losing steam, hinting at a potential upward reversal. Based on these technical indicators, it is advised to buy the stock on dips until it reaches the Rs 65 level, with an upside target of Rs 78. To manage risk, a stop-loss is suggested at Rs 59, based on a daily closing price, which would limit potential losses if the stock breaks below this key support level.
(Disclaimer: Jigar S Patel is a senior manager of equity research at Anand Rathi. Views expressed are his own.)
First Published: Sep 19 2024 | 6:27 AM IST
