IndusInd Bank, Tata Consumer: Top picks by Jigar S Patel of Anand Rathi

IndusInd Bank

In recent trading sessions, IndusInd Bank has demonstrated resilience by holding steady at its crucial historical support level of Rs 1335. This level has historically been significant, acting as a strong foundation where buyers step in, preventing further declines. Moreover, the formation of a bullish AB=CD pattern near this support level is a notable technical signal.

The AB=CD pattern is a classic chart pattern in technical analysis that indicates a potential reversal in trend, suggesting that the stock may be poised for an upward move. Complementing this, the Relative Strength Index (RSI) on the daily chart has been forming an impulsive structure, which typically signals strong momentum and increasing buying pressure.

Together, these technical indicators make IndusInd Bank an attractive candidate for a long position. As a result, it is recommended to consider buying the stock in the price range of Rs 1370-1390, aiming for an upside target of Rs 1500. However, it is crucial to manage risk by setting a stop-loss at Rs 1299 on a daily closing basis to protect against potential downside.

Tata Consumer
The Tata Consumer recently reached a peak of Rs 1247 on July 23, 2024, but since then, it has experienced a correction of approximately 96 points, resulting in an 8 per cent decline in price. Currently, the stock is showing signs of finding support near its previous breakout range, a crucial level that often acts as a floor for prices. This support coincides with a 0.382 Fibonacci retracement level from the stock's earlier uptrend, which began at Rs 1016 and extended to Rs 1247.

The alignment of the price with this retracement level adds further significance to this support area. Additionally, technical indicators are turning favourable; the Super trend indicator on the hourly chart has shifted to a bullish mode, suggesting potential upward momentum.

Moreover, the 9-period Simple Moving Average (SMA) is providing additional support, reinforcing the idea that the stock is poised for a rebound. Given these technical factors, a long position is recommended in the price zone of Rs 1180-1170, with an expected upside target of Rs 1300. A stop-loss should be placed at Rs 1130 on a daily closing basis to manage risk.

 

Grasim

Grasim recently reached a peak of Rs 2866 on July 26, 2024, but since then, it has undergone a correction, shedding about 360 points, which translates to a 13 per cent decline in its price. Currently, the stock is beginning to show signs of stabilizing as it approaches a critical support level, near its previous breakout range.

This level is significant because such breakout ranges often serve as strong support zones, acting as a price floor where buyers might step in. This support area is further reinforced by two key technical indicators: the 100-day Exponential Moving Average (DEMA) and the 0.50 per cent Fib retracement level from the stock's prior uptrend, which began at Rs 2163 and peaked at Rs 2866.

The convergence of these indicators at the current price level highlights the importance of this support zone and suggests it may hold. Moreover, technical indicators are starting to turn favourable. Specifically, the Relative Strength Index (RSI) on the hourly chart has formed a bullish divergence, a pattern that often signals a potential reversal or upward momentum in price.

Considering these technical factors, it is advisable to initiate a long position in GRASIM within the price range of Rs 2665-2690. The expected upside target is Rs 2860, with a recommended stop-loss at Rs 2575 on a daily closing basis to protect against downside risk.

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