Honeywell Automation (₹33,253.6)
Rally hits a roadblock
The stock of Honeywell Automation has been depreciating since mid-March as it faced strong resistance at ₹50,000. In early May, it slipped below the key support at ₹38,000 and has sustained below these levels. The rally in the past few weeks seems to be a corrective one. We expect the scrip to begin the descent from here. Even if the rally extends, it may not go beyond ₹37,000.
On the downside, the stock is likely to fall to ₹26,200 – the nearest notable support. Therefore, one can consider going short. Yet, we recommend splitting the entryies into three legs. i.e., Go short now and on a rally to ₹35,000 and to ₹36,800. Keep the stop-loss at ₹39,200. When price drops below ₹30,000, tighten the stop-loss to ₹35,000. Tighten it further to ₹32,000 when price goes below ₹28,600. Exit the entire short positions at ₹26,200.
ITC (₹284.35)
Makes 52-week high
The stock of ITC has been bucking the trend of the overall market, especially in the last three months. Continuing the uptrend, it made a higher high and hit a fresh 52-week high of ₹285 on Friday. This opens the door for further strengthening and we expect the stock to rally in the coming weeks. It is forecasted to move past the hurdle at ₹310 and touch ₹322 before the end of this year.
But as with any breakout, there are chances for a pullback and thus, prices can inch down to ₹272 before breaking out of ₹300. Given these factors, we suggest traders to buy the stock now and on a decline to ₹272. Keep initial stop-loss at ₹258. When price hits ₹310, exit one-third of the longs and tighten the stop-loss to ₹295. Exit the remaining at ₹322.
TVS Motor Company (₹860.45)
Hits a record high
The stock of TVS Motor Company is among the few companies that have been moving higher despite the broader market facing a downward pressure. Last week it registered a fresh lifetime high of ₹886.3. Price action denotes that there is more to come. Although it could witness a corrective decline to ₹760, it will most likely resume the uptrend from those levels.
Given the current momentum, it can breach the psychological ₹1,000-mark and rally to ₹1,100 this year. Hence, traders can go long in two legs. That is, Initiate fresh buys at the current level of ₹860 and accumulate when price declines to ₹760. Place initial stop-loss at ₹690. When the scrip decisively breaches the important ₹1,000-mark, revise the stop-loss upwards to ₹930. Liquidate all your long positions when the stock appreciates to ₹1,100 – a potential barrier as indicated by the Fibonacci extension.
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