Big Movers on D-St: What should investors do with Cholamandalam Investment, Dr Reddy’s Laboratories and HCL Tech?

Indian market remained shut on Friday on account of a public holiday.

Sectorally, buying was seen in realty, auto, oil & gas, and healthcare while selling pressure was visible in IT, metals, FMCG, and consumer durables.

Stocks that were in focus include names like Cholamandalam Investment which rose more than 7%, Dr. Reddy’s Laboratories which hit a fresh 52-week high and HCL Technologies which fell nearly 2% on Thursday.

Here’s what Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Ltd recommends investors should do with these stocks when the market resumes trading today:

Cholamandalam Investment & Finance: Sell on rally
Last Thursday, the stock registered a fresh all-time high of 847.05. The stock has rallied over 10% in a week. Technically, on the daily and weekly charts, the stock has formed a range breakout formation.

It has also formed a long bullish candle which is largely positive. We are of the view that 810-800 would act as key support areas for the stocks while 860-880 could act as a profit booking area for the bulls.

The short-term market structure is bullish but due to temporarily overbought conditions, we could see some profit booking at higher levels.

Hence, ‘buying on dips’ and ‘sell on rallies’ would be the ideal strategy for trend-following traders. However, below 800, the uptrend would be vulnerable.

Dr. Reddy’s Laboratories: Buy
After a medium-term correction, the stock took support near the 200-Day SMA (Simple Moving Average) or 4350 and bounced back sharply.

Post reversal, the stock has already rallied over 8%. Currently, the stock is comfortably trading above short-term averages, and it also formed a range breakout formation on the weekly charts which indicates the continuation of the uptrend in the future.

For breakout traders now, 4650 and 4600 would act as important support. As long as the stock is trading above the same, the uptrend wave is likely to continue.

Above this, the stock could rally to 4800-4835. On the flip side, below 4600 traders may prefer to exit out from the trading long positions.

HCL Technologies: Buy
After a short-term correction, the stock took support near 1050 and reversed sharply. Post reversal, currently the stock is witnessing positive consolidation formation near 20 and 50-Day SMA (Simple Moving Average) levels.

The short-term texture of the chart suggests a strong possibility of a fresh uptrend rally from the current levels.

For the positional traders now, 1065 would be the immediate support level. If the stock succeeds to trade above the same, then it could move up to 1135. Further upside may also continue which could lift the stock till 1150.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)