Technical stocks to watch out for on Tuesday
Kajaria Ceramics Ltd: After registering a 52-week low, the stock has witnessed almost 41 per cent pullback rally. The stock has registered a high of Rs 416 as on June 23, 2020, and thereafter, witnessed sideways price action. During this sideways phase, mostly, the volume was below 20-day averages volumes, which suggest that it is just a routing decline after a robust move. On Monday, the stock has formed an NR7 bar, which is an early sign of an exponential move on cards. Further, on the lower timeframe, i.e. 60-minute, the Bollinger Bands, which have developed on the basis of the last 20 periods volatility, are coming closer. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days. Going ahead, the important levels to watch out would be Rs 395 on the higher side and Rs 384 on the downside. A break on either side would open doors for a directional move.
Kaveri Seeds Company Ltd: Considering the daily timeframe, after registering a 52-week high as on June 18, 2020, the stock has witnessed a minor correction. During the corrective phase, the stock has formed Adam & Adam double bottom pattern near 23.6 per cent retracement level of its prior upward move (Rs 273.75-Rs 634). On Monday, the stock has given a neckline breakout of a double bottom pattern. This breakout is confirmed above the 50-day average volume. Additionally, the stock formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. The leading indicator, 14-period daily RSI, is currently quoting at 67.51 and it is in a rising trajectory. Further, the trend strength indicator ADX is at a healthy level of 26.51. The directional parameter +DI is much above the -DI. Going ahead, we expect the stock to continue its positive momentum as long as it sustains above Monday’s low of Rs 586 level. On the higher side, the level of Rs 634, followed by Rs 651, would be seen as the next resistance zone for the stock.
Varun Beverages Ltd: The stock has formed a reversal bearish engulfing candlestick pattern as on June 22, 2020, and thereafter, witnessed a correction. The correction is halted near 50 per cent Fibonacci retracement level of its prior upward move (Rs 586-Rs 739.05) and it coincides with the 50-day EMA level. On Monday, the stock has given a downward sloping trendline breakout formed by connecting swing highs from June 22, 2020. This breakout is confirmed by relatively higher volumes. Additionally, the stock has formed an opening bullish Marubozu candlestick pattern on the breakout day, which indicates an extreme bullishness. The stock's relative strength index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above the 60 mark after a span of almost 19 trading sessions. Hence, we expect the bias to remain positive as long as the stock sustains above Monday’s low of Rs 691.15 level. On the higher side, the level of Rs 739, followed by Rs 780, would be seen as the next resistance zone for the stock.