Technical stocks to watch out for on Monday

Granules India Ltd: From the low of Rs 114.10, which was registered on March 23, 2020, the stock has maintained its rhythm of higher highs and higher lows. On Monday, the stock bounced exactly from the edge of upward sloping trendline support (on a logarithmic scale) formed by connecting swing lows since March 2020. While on Friday, the stock has given a ‘cup pattern’ breakout. The length of the cup pattern was of 19 trading sessions and the depth of the pattern was nearly 16 per cent. This breakout is confirmed by the above 50-day average volume. As the stock is at its 52-week high, it is trading above all the short and long-term moving averages. The stock is meeting the criteria of Mark Minervini’s trend template. The current stock price is above both the 150-day (30-weeks) and 200-day (40-weeks) moving average price lines. Moreover, 30 and 40-weekly averages are also trending up and at the same time, they are in the desired sequence. Talking about the indicators, the 14-period RSI is in a rising trajectory in both the weekly and the daily timeframe. Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, an important support for the stock is placed at the zone of Rs 320-Rs 314 as it is the confluence of short-term 13-day EMA and 20-day EMA level.

Maruti Suzuki India Ltd: The stock had formed a reversal ‘three white soldiers-like candlestick pattern’ as on April 09, 2020, and thereafter, marked the sequence of higher tops and higher bottoms. The stock has gained nearly 80 per cent from the low of April 03, 2020. The stock has relatively outperformed the frontline indices in the current leg of the upward rally. Also, the stock relatively outshines Nifty 500 with a decent margin. Relative strength comparison with Nifty 500 and Nifty 50 has reached to new heights. In the recent minor correction, the stock has taken support near its 20-day EMA and on Friday, the stock has moved above its recent swing high, which suggests a further bullish momentum. Also, on Friday, the stock has witnessed a robust volume of nearly double the 50-day average volume, indicating a strong buying interest by the market participants. The stock is meeting Daryl Guppy’s multiple moving averages set up rules as it is trading above both the short and long-term moving averages. A daily momentum indicator RSI reading is at 67.25 level with a positive crossover, which points out for a positive breath in the stock. Considering all the above factors, we expect the bias to remain positive as long as the stock sustains above its recent swing low of Rs 6,790 level. On the higher side, the level of Rs 7,570, followed by Rs 7,760, would be seen as the next resistance zone for the stock.

Supreme Industries Ltd: After registering the high of Rs 1,409.75, the stock has entered into a corrective phase. The correction is halted near the 38.2 per cent Fibonacci retracement level of its prior upward move (Rs 1,191.30-Rs 1,409.75) and coincides with the 13-day EMA level. Currently, the stock has given a 7-day consolidation breakout along with relatively higher volumes. Further, the stock is trading above its short and long-term moving averages. The daily RSI is currently quoting at 68.34 and it is in a bullish zone. The MACD stays bullish as it is trading above its zero line and signal line. The ADX is strong at 35.75 levels. The +DI is much above the –DI, which shows strength in the trend. Hence, we would advise the traders to be with a bullish bias. On the downside, an important support for the stock is placed at the zone of Rs 1,305 -Rs 1,320.

Tata Communications Ltd: The stock had given a ‘bullish squeeze alert-like candlestick pattern’ breakout as on the weekend of April 09, 2020, and thereafter, marked the sequence of higher tops and higher bottoms. On August 20, 2020, the stock had formed a reversal Doji candlestick pattern and thereafter, witnessed correction. The correction is halted in between 38.2 per cent and 50 per cent retracement of its prior upward move (Rs 755-Rs 930) and coincides with the 20-day EMA level. During this sideways phase, mostly, the volume is below the 50-day averages volumes, which suggest that it is just routing decline after a robust move. Currently, the stock is trading above its short and long-term moving averages. The 14-period RSI on the daily timeframe is in bullish territory. Furthermore, in the recent sideways to corrective mode, the RSI never breached its 60-mark, which indicates that the stock is in a super bullish range as per the RSI range shift rules. Going ahead, we expect the stock to continue its positive momentum as long as it sustains above its 20-day EMA, which is currently placed at Rs 855 level.