Oversold market spurs selective buying as analysts eye breakout stocks

Even as benchmark indices remain under pressure, analysts are gravitating towards selective bullish bets, backed by fresh build-up and breakout patterns in individual stocks. This tilt is because of deeply oversold market conditions, which are raising the odds of near-term pullbacks and short-covering rallies. A look at the top derivative picks of analysts.

BULLISH BETS

TITAN COMPANY
Change in Open Interest in April Series: 0.8% Change in price in April Series: 3.7%

RATIONALE: Strong rollover into the April series, along with a lower roll cost of 0.31% (from 0.68%), shows traders are willing to pay to stay bullish, said Rajesh Palviya, head of technical and derivatives research at Axis Securities.

“As the Akshaya Tritiya festival nears, the market is bullish that the upcoming Q4 earnings will validate Titan’s ability to turn elevated gold prices into superior margins and footfalls,” he said. Palviya suggests buying on dips for a target of Rs 4,270-4,300, with a stop loss in futures at Rs 4,020-4,030.

ADANI POWER

Change in Open Interest in April Series: 98.95% (newly inducted in the futures segment) Change in price in April Series: 1.67%

RATIONALE: The stock has witnessed a bullish breakout from a congestion zone of more than fi ve months with a signifi cant rise in volumes, said Vipin Kumar, AVP – derivatives and technical research at Globe Capital Market.

“The breakout is well supported by long buildup in the fi rst two trading sessions after its induction in the derivatives segment,” he said. Kumar said traders can buy its April Futures in the Rs 159-156 range for a target of Rs 170-175, with a stop loss at Rs 147.

NATIONAL ALUMINIUM
Change in Open Interest in April Series: -14.55% Change in price in April Series: 4%

RATIONALE: The stock has witnessed a close at the highest level on a weekly basis, said Sudeep Shah, head - technical and derivative research, SBI Securities. The fall in open interest and rise in share price point to short-covering. The stock is expected to move towards Rs 419-427 and can be bought with a stop loss at Rs 388, said Shah.

ABB INDIA
Change in Open Interest in April Series: 0.3% Change in price in April Series: 3.4%

RATIONALE: ABB’s higher-than-average rollover confi rms structural bullishness, said Palviya of Axis. “This transition from a high cost to a ‘discount’ during a price upswing suggests that long positions are being rolled with high conviction and effi ciency,” he said. “Investors are clearly looking past minor regulatory hurdles, positioning aggressively for a Q4 print expected to showcase scalable margins from massive greenfield infrastructure orders,” Palviya suggests buying on dips for a target of Rs 6,550-6,600, with a stop loss at Rs 5,950 (Futures rates).

JINDAL STEEL
Change in Open Interest in April Series: 0.67% Change in price in April Series: -1%

RATIONALE: Profit-taking in Jindal Steel from its all-time highs has halted near its previous breakout levels, which also coincide with the six-month exponential moving average, said Globe’s Kumar. “Considering its current chart positioning, we expect it to continue its prevailing uptrend, potentially reaching Rs 1220 in the immediate near term,” he said. Kumar advises buying its April Futures in the Rs 1,125-1,105 range, for a target of Rs 1,220, and stop loss at Rs 1,070

HINDALCO INDUSTRIES
Change in Open Interest in April Series: -1.8% Change in price in April Series: 3.6%

RATIONALE: The share surge, along with a decrease in open interest, suggests short covering. Fundamentally, the rally is underpinned by global supply shocks at EGA and Alba, which have bolstered LME aluminium benchmarks, said Palviya of Axis.

“Market focus now shifts to the Q4 earnings print, where these elevated benchmark realisations are expected to translate into sustainable margin expansion for both domestic operations and Novelis,” he said. Palviya suggests buying the stock on any dips for a target of Rs 980- Rs 1,000, and stop loss at Rs 875

BEARISH BET

PG ELECTROPLAST
Change in Open Interest in April Series: 17.8% Change in price in April Series: -3.3%

RATIONALE: The stock hit a fresh 52-week low of Rs 443.05 on Thursday. It has broken down from a consolidation, forming a lower high–lower low pattern on weekly charts, said SBI’s Shah. “It is trading below its short- and long-term moving averages, and we expect the stock to test lower levels,” he said. Shah recommends selling PGEL between Rs 438-443 with a stop loss at Rs 452 for a target of Rs 417.