Som Distilleries and Breweries (SDBL)
SDBL reached a peak near Rs 149 in May 2024, but since then, it has experienced a significant decline, losing approximately 44 points, which translates to a 29 per cent drop in price. This sharp decline brought the stock down to a critical support level, forming a triple bottom pattern in the range of Rs 105-108.
The triple bottom pattern, occurring at a previous demand zone, is often considered a bullish signal, suggesting that the stock has found strong support at these levels and may be poised for a reversal.
In the most recent trading session, the stock saw a surge in trading volume, indicating renewed investor interest. The price action in this session was strong enough to break through a 3-4 month-long bearish trendline, signaling a potential shift from a downtrend to an uptrend. Additionally, a similar trendline violation has been observed in the Relative Strength Index (RSI) on the daily chart, further confirming the bullish momentum.
These technical developments make the stock an attractive buy candidate at current levels. Based on this analysis, we recommend going long in the price range of Rs 110-114, targeting an upside of Rs 128. To manage risk, a stop-loss should be placed at Rs 104 on a daily closing basis, ensuring protection against any further downside.
Hikal
Between March 2023 and June 2024, Hikal Limited’s stock was in a consolidation phase, trading within a relatively narrow range of Rs 260 to Rs 320. This prolonged consolidation period suggests that the stock was in a phase of accumulation, where neither buyers nor sellers had the upper hand. However, the stock eventually broke out of this range, supported by significant trading volume, which is often a strong indicator of a shift in market sentiment towards bullishness.
Following this breakout, Hikal rallied by nearly 40 points, underscoring the strength of the breakout. Despite this rally, the recent correction in the stock price presents a renewed buying opportunity. From a technical perspective, the weekly Ichimoku base line is now acting as a crucial support level, aligning closely with the breakout range. This confluence of support levels suggests that the stock is well-positioned for further upside, making it a compelling buy.
Given these technical indicators, it is advisable to buy Hikal within the price range of Rs 325 to Rs 335. The stock shows potential for an upside target of Rs 400, which represents a significant gain from the current levels.
To manage downside risk, a stop-loss should be placed at Rs 295 on a daily closing basis, ensuring that any potential losses are limited if the stock fails to hold its support levels.
Patel Engineering
After reaching a peak around the Rs 70 mark in July 2024, the stock experienced a notable correction, losing 19 points, which translates to a significant 27 per cent decline from its recent high. This sharp pullback brought the stock down to a critical support level, located within the demand zone of Rs 50-53, a level that previously acted as a strong support during its prior uptrend.
At this crucial support level, a bullish bat pattern has emerged—a harmonic pattern known for signaling potential bullish reversals. The bullish bat pattern is typically formed when the price action retraces to specific Fibonacci levels, indicating that the stock is poised for a reversal from its recent decline.
The emergence of this pattern, combined with the stock finding support at a key demand zone, creates a strong confluence of technical indicators that point towards a potential upward move.
Given these favorable technical signals, the current price levels are considered attractive for buying. Therefore, it is recommended to buy the stock within the Rs 55-58 range, with an upside target of Rs 68. To manage risk and protect against further downside, a stop-loss should be placed near Rs 51 on a daily closing basis.
(Jigar S Patel is a senior manager of equity reserach at Anand Rathi. Views expressed are his own.)
First Published: Sep 02 2024 | 6:34 AM IST
