Bata India, Escorts: Trading strategies for mid-cap losers of 2021

If these stocks manage to cross their significant resistances, the upside may result in a surge of over 5 per cent

MidCap stocks have been on a roll in 2021 as cheap valuations attract investors towards the segment. The S&P BSE MidCap index hit a fresh record high of 21,717 in the intra-day deals today, surging 1 per cent on the BSE. In comparison, the benchmark S&P BSE Sensex was up 0.22 per cent at 1:50 PM. So far in CY21, the MidCap index has zoomed nearly 20 per cent at the bourses, as against a 5.8 per cent gain in the frontline 30-share index.  

Individually, shares of Adani Total Gas and Bharat Heavy Electricals have skyrocketed 256 per cent and 101 per cent on the exchanges while those of Tata Elxsi, Deepak Nitrite, JSW Steel, Dalmia Bharat, SAIL, Polycab India, Bank of India, Vinati orgnics, Tata Chemicals, Dixon Technologies, Bank of Baroda, Ashoka Leyland, and Coforge have added between 23 per cent and 94 per cent.

Given the outperformance, analysts believe mid-cap stocks are now trading at elevated premiums to large-caps yet remain well below averages on a forward valuations basis. This is largely as earnings growth expectations for smaller companies in India appear particularly high.

However, not all stocks partcipated in the rally. Vodafone Idea, Whirlpool of India, AstraZeneca Pharma, Zee Entertainment, Syngene International, and Bata India are among the 30 stocks that have declined up to 20 per cent so far in 2021.

Against this backdrop, should you exit these underperformers? Here's what charts say:   

Whirlpool of India Limited (WHIRLPOOL)
 
Likely target: Rs 24.15 (after a close above Rs 22 mark)

Upside potential: 9%

The stock has taken support of the 200-days moving average (DMA), positioned at Rs 19.05 levels. Yet, the 200-weekly moving average (WMA), placed at Rs 24.15, is becoming a major resistance to the upside. The immediate trend suggests that a rally towards the resistance of Rs 24.15 will be possible only after a close above Rs 22-mark, as per the daily chart. CLICK HERE FOR THE CHART
 
Amara Raja Batteries Limited (AMARAJABAT)
 
Likely target: Rs 839 (till the support of Rs 750 is held decisively)

Upside potential: 6%

The stock is trading below the significant moving average of 200-DMA, placed at Rs 839-mark. There is a formation of "Death Cross" of 50-DMA and 200-DMA, suggesting a major downside below the level of Rs 750. That said, as long as the stock will hold this level, the upside bias may result in a rally towards the 200-DMA, as per the daily chart.CLICK HERE FOR THE CHART

Syngene International Ltd (SYNGENE)

Likely target: Rs 600 (provided 200-DMA is held)

Upside potential: 4%              

While the stock is struggling to cross the resistance of Rs 625 and Rs 600 levels, the level of 200-DMA, currently placed at Rs 558, has remained a strong support. It needs to hold this support to cross these resistances. The major technical indicators are not supportive of the upside bias, as per the daily chart. CLICK HERE FOR THE CHART

Escorts Ltd (ESCORTS)

Likely target: Rs 1,229

Upside potential: 3.50%

With a "Death Cross" of 200-DMA with 50-DMA, the stock's outlook has turned negative below the support of Rs 1,100 levels. The immediate resistance comes at Rs 1,229-mark, which is its 50-DMA, as per the daily chart. A mild resistance of Rs 1,200 can be noted considering the overall candlestick structure. CLICK HERE FOR THE CHART

Alembic Pharmaceuticals Ltd (APLLTD)

Outlook: Unless the major resistance arenot conquered, better to stay cautios

This stock is trading below 200-DMA placed at Rs 980 levels. The Relative Strength Index (RSI) has a resistance of 53 value. Now, unless both these price and technical indicators' resistances are not conquered, the upside bias may see selling pressure. A closing basis breach below Rs 940 levels may drag this counter further towards Rs 910 mark, as per the daily chart. CLICK HERE FOR THE CHART

Bata India Ltd (BATAINDIA)

Likely target: Rs 1,550 -  Rs 1,600

Upside potential: 2.65% - 5.96%

This stock has crossed the resistance of 100-DMA placed at Rs 1,480 levels. The RSI is witnessing buying momentum even in the overbought category. MACD, too, has conquered the zero line upward. All these are indicating a firm bullish sentiment towards the next resistance of Rs 1,550 and Rs 1,600 levels, as per the daily chart. The immediate support comes a Rs 1,450 mark.CLICK HERE FOR THE CHART