Top three reversal stocks to watch out for!

This is the list of strong reversal stocks that are likely to witness reversal.  

In the week gone by, Nifty extended its losing streak for the fifth straight week as it ended down by 3.83 per cent on a weekly basis. Throughout the week, the market was under a strong bear grip while in all the trading sessions of the week, Nifty ended in the red. During the week, the market saw some intermittent short-covering but given the fact that the bears were at the helm on D-Street, short-covering rallies were short-lived in nature.   

In the last nine trading sessions, Nifty has lost nearly 1,600 points from its swing high of 17,377.65, which was registered as of April 29, 2022. An interesting point to note here is that the market has not given any technical pullback, which would be quite possible in such cases. Furthermore, with this sharp fall, Nifty has reached a very important support area, which is in the form of a double bottom on the weekly chart as well as the 61.8 per cent retracement level of the CY21 rally. Given the fact that the market has not seen any significant pullback in the last couple of weeks and this corrective move hauled daily & weekly stochastic oscillator in the oversold territory, we are expecting a pullback in the index in the immediate support term.  

So, the important question is that if the pullback is in the sight, which stocks should traders keep on their watchlist?  

This is the list of strong reversal stocks that are likely to witness reversal.  

Here is the list:  

Cummins India: On Friday, the stock of Cummins India gained over 4 per cent and volumes too were robust. Volume for the day was the highest since April 26, 2022. Interestingly, the stock on the weekly chart has formed a candle, which resembles a hammer candle. The hammer pattern is a single candle bullish reversal pattern. Hence, watch out for this stock! 

Poonawalla Fincorp: Poonawalla Fincorp had a dream outing on Friday as the stock zoomed over 14 per cent and the upmove was seen on the back of the robust volume. The volume was the highest since April 18, 2022. Moreover, the stock has bounced back from an important crucial support level in the form of change in polarity as the earlier resistance changed its role and acted as the new support level for the price. Also, on the weekly chart, the stock has formed a bullish reversal like a candle at the 50-weekly moving average. Hence, demands special attention!  

SRF: The stock has formed a hammer-like pattern on the weekly chart and this pattern act as a bullish reversal pattern. Moreover, the formation of this pattern is placed around the 50-weekly moving average; hence, it adds credibility to it. So, keep this stock on your radar.