Buy ideas for May 22: Britannia, Cipla; check target prices

Cipla was in a downtrend and corrected ~13 per cent in the recent fall. On the daily charts it formed an Inverted Head and Shoulders pattern which is a Trend reversal pattern

Britannia

The stock was consolidating in a narrow range after a sharp run up. The consolidation has taken the form of a Symmetrical Triangle pattern on the daily charts. The pattern is a trend continuation pattern, and we expect the stock to resume its next leg of upmove. The Daily momentum indicator MACD has a positive crossover which is a Buy signal. Thus, both price and momentum indicators are pointing towards resumption of the upmove. We expect the stock to move towards Rs 5,386 which is the previous all time high and beyond that it can stretch towards the psychological level of Rs 5,500. One should place a stop loss of Rs 5,085 for the long positions.

Cipla

The stock was in a downtrend and corrected ~13 per cent in the recent fall. On the daily charts it formed an Inverted Head and Shoulders pattern which is a Trend reversal pattern. It has broken above the neckline of that pattern which confirms trend reversal. The daily momentum indicator MACD has a positive crossover which is a Buy signal. The breakout has been accompanied with volume and further affirms the breakout. We expect the stock to retest its previous all time high of Rs 1,519. One should place a stop loss of Rs 1,396 for the long positions.

(Jatin Gedia is a technical research analyst at Sharekhan by BNP Paribas. Views expressed are his own)