Trade Spotlight: HCL Technologies, Dr Reddy’s & Hindalco in focus

Bears took control of D-Street on Thursday and pushed benchmark indices below crucial support levels. The S&P BSE Sensex fell below 39,000 while the Nifty50 breached 11600 on the downside.

Let’s look at the final tally on D-Street on Thursday – the S&P BSE Sensex fell 323 points to 38,979, and the Nifty50 closed with losses of 88 points to 11516.

Sectorally, the action was seen in healthcare, and IT stocks while selling pressure was seen in Realty, Metal, Bankex, Capital Goods, and Power index.

The action was seen in HCL Technologies rose over 2 percent to hit a fresh 52-week high, Dr Reddy’s Laboratories gained more than 4 percent to hit a fresh 52-week high, and Hindalco was down more than 4 percent.

Expert: Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

HCL Technologies: Rs 780 should be the trend decider level for the bulls

On September 14, the stock made another all-time high of Rs 825.10 and post a strong breakout, the stock is hovering in the range of Rs 780 to Rs 825.

In this quarter alone, the stock has rallied over 45 percent, and the important point is that the stock has not only surpassed its previous 52-week high of Rs.738.90 but it comfortably managed sustained above the same.

The sharp surge in the price action surprised most of the traders. On the daily as well as weekly charts, the stock has formed a breakout continuation pattern which is grossly positive for the HCL Technologies.

However, on the weekly time frame, momentum indicators indicate that the stock is in an overbought zone and there are high chances of quick short-term price correction is not ruled out if the stock trades below Rs 780.

For the next few trading sessions, Rs 780 should be the trend decider level for the bulls. If the stock sustains above Rs 780 then we can expect a continuation of the uptrend up to Rs 850.

Further, the uptrend may also continue which could take the stock towards Rs.880. On the flip side, dismissal of Rs 780 could possibly trigger a quick short-term correction up to Rs 700.

Dr Reddy’s Laboratories Ltd: Rs 4650 and Rs 4575 should be the key levels to watch

In this month so far, the stock has rallied nearly 9 percent. On September 17, Dr Reddy’s Laboratories registered a fresh 52-weeks high of Rs 4,845.55.

After a very strong intraday session, it was closed above the Rs 4765 resistance mark, which is broadly positive. The important thing is the volume activity, the incremental volume activity near breakout clearly indicates high chances of the further uptrend from current levels.

On the daily and weekly charts, the stock has formed a strong promising price volume breakout formation that indicates bulls are clearly dominating the price action.

Hindalco: Fresh buying can be considered now and on dips

After a strong uptrend, the rally from Rs 154 to Rs 203. Currently, the stock is consolidating in the rage of Rs 175 to Rs 200.

However, the short-term structure of the stock is still on the positive side. Currently, Hindalco is trading near the important retracement level and on daily charts, the stock has formed a double-bottom formation which indicates a strong possibility of a fresh uptrend wave from current levels.

In addition, the stock is trading near 50-Day SMA with modest volume activity that also helped positional traders to take a positive stance near the crucial support level.

Unless it is trading below Rs 165, positional traders retain an optimistic stance and look for a target Rs 190. Fresh buying can be considered now and on dips if any between Rs 175 and Rs 170 levels with a stop loss below Rs 165.