Buy & sell ideas for July 01 from Anand Rathi: Nestle, SBI Life, ONGC

Nestle India 

Recently, Nestle India has shown significant technical resilience by finding support around the Rs 2,500-mark, a critical support zone for the stock. 

This support level is crucial as it has historically acted as a strong floor, preventing the stock from declining further. Moreover, the stock has formed a rounding bottom pattern near this zone, which is typically a bullish signal indicating a potential reversal of a downtrend. 

Adding to the bullish outlook, the Relative Strength Index (RSI) on the daily chart has bounced back from the 50 level. The RSI is a momentum indicator, and a reversal from the 50 level suggests renewed buying interest and potential upward momentum. 

 

Given these technical signals, we recommend investors and traders to consider going long on Nestle India within the price range of Rs 2,530-2,555. The suggested upside target for this trade is Rs 2,650, while a stop-loss should be set at Rs 2,480 on a daily closing basis to manage potential downside risks.

SBI Life

In recent days, SBI Life stock has been consolidating within the Rs 1,440-1,480 range. This consolidation phase suggests that the stock was undergoing a period of accumulation or stabilisation after prior movements. 

Notably, SBI Life has recently broken out of this consolidation range and is now sustaining levels above it, indicating a potential upward trend. The consolidation occurred around the 21-day, 50-day, and 100-day Exponential Moving Averages (DEMA), which is a positive technical sign. 

These moving averages are significant because they represent different periods of price action, and consolidation around these levels suggests strong support and stability. From an indicator perspective, the Relative Strength Index (RSI) on the daily chart has rebounded from the 50 level. 

The RSI is a momentum oscillator, and a bounce from the 50 level typically signifies increasing buying pressure and a potential upward trend. Considering these technical factors, we recommend going long on SBI Life within the Rs 1,475-1,495 price range. The suggested upside target is Rs 1,565, while a stop-loss should be set at Rs 1,445 on a daily closing basis to manage risk.

ONGC

Recently, ONGC has experienced a reversal from its support level at Rs 265, which coincides approximately with its 100-day Exponential Moving Average (DEMA). 

This alignment enhances the attractiveness of ONGC at its current levels, as the 100 DEMA is a significant technical indicator used to assess the stock's medium-term trend. 

Additionally, the Moving Average Convergence Divergence (MACD) indicator on the daily chart has shown bullish divergence during the previous correction phase, indicating that the stock's downward momentum was weakening. 

Furthermore, the MACD has formed a bullish cross near the zero line, which typically signals the start of a new upward trend. These technical indicators support a bullish outlook for ONGC. Based on this analysis, we recommend buying ONGC within the Rs 272-276 price range, targeting an upside of Rs 300. To manage risk, a stop-loss should be placed at 260 on a daily closing basis.

(Jigar S Patel is a senior manager of equity research at Anand Rathi. Views expressed are his own.)