Top stocks under ₹200 to add to your watchlist
6 min read . Updated: 15 Mar 2023, 11:34 AM IST
Premium- A good time to accumulate the best outperforming stocks is when the market is in a consolidation phase.
Indian share markets have been volatile in the past few weeks. But they’re largely trending in the range of about 5%.
The US benchmark index, Dow Jones, is trending between 30,000-35,000 while the Indian benchmark BSE Sensex is between 58,000-62,000.
The volatility in individual stocks is high as the index trends in this range.
As a trader and an investor, this is a good time to accumulate the best outperforming stocks when markets are in such a consolidation phase.
In this article, I'll discuss the stocks which are trading between ₹100-200 that you can add to your watchlist. This is a mix of largecaps, midcaps, and smallcap with a minimum marketcap of around ₹10 billion (bn).
To shortlist the stocks, I have used a strategy using technical indicators like moving averages to define the direction of the trend and the Relative Strength Index (RSI) to define the strength of the trend.
Strategy:
⦁ Golden Cross on the Weekly Chart
⦁ Weekly RSI (14 periods) should be above 50
⦁ Golden Cross on Daily Chart
⦁ Daily RSI (14 periods) should be above 40
In technical analysis, the term "Golden Cross" refers to a bullish signal that occurs when the 50-day moving average (MA) of a security crosses above its 200-day moving average.
The 50-day MA is a short-term trend indicator, while the 200-day MA is seen as a long-term trend indicator.
When the 50-day MA crosses above the 200-day MA, it suggests that the short-term trend has turned bullish and is gaining strength, which could potentially lead to a sustained uptrend in the future.
The Relative Strength Index (RSI) is a popular technical oscillator used in financial markets to analyse the strength of the momentum in a security's price movement.
It is calculated by comparing the average gains and losses of a security over a specific period. The default period a technical analyst uses is 14 periods.
The RSI is plotted on a scale from 0 to 100. Readings above 70 generally indicate an overbought condition. Readings below 30 indicate an oversold condition.
Traders use the RSI to identify potential trend reversals and to determine whether a security is overbought or oversold.
Based on the above criteria, I have filtered 9 stocks.
#1 Aditya Birla Capital (AB Capital)
The first stock is Aditya Birla Capital.
In the image below, on the left is the weekly chart while on the right is the daily chart.
The 50-period moving average is the blue line while the orange line is the 200-period moving average. These are the default colours used to highlight the averages on the charts.
In the lower panel, the RSI is highlighted on the weekly and daily charts.
On the daily chart, we are witnessing the trendline breakout, indicating the resumption of the bullish momentum.
Additionally, the bullish range shift on the RSI strengthens the bullish scenario on the daily chart.
On the weekly chart, the higher high – higher low pattern signals a medium-to-long-term bullish trend.
#2 Federal Bank
Next is a private lender, Federal Bank.
We witnessed a huge rally in Federal bank right from ₹80-85 to ₹140 levels.
Since its high of ₹143 in January 2023, the stock is consolidating in the range of ₹120-140.
On the weekly chart, the breakout at the horizontal trendline was re-tested and the bullish momentum post the re-test indicates the resumption of the trend.
On the daily chart, the stock price reclaimed the 50 DMA. The RSI in the lower panel witnessed upward momentum, signalling a strong bullish trend.
The stock can see a good upside momentum and investors should have this stock on their watchlist.
#3 Firstsource Solutions Ltd (FSL)
On the weekly chart of First Source Limited (FSL), a bottoming technical structure is visible at the 200 WMA.
The multiple support at ₹90-92 indicates the support area strengthened by the long-term moving average.
On the right-hand side, the daily chart signals the re-test of a breakout from the previous swing high at ₹110. The resistance will turn to support at ₹110. This will also act as a demand zone for the bulls.
The bullish structure indicates investors should definitely add this stock to their watchlist.
#4 Gujarat Pipavav Ports Ltd (GPPL)
With a marketcap of over ₹50 bn and stock trading at a 52-week high, the chart indicates the bullish structure of higher high – higher low as per Dow theory.
On the daily chart, the stock is trending with the support of a rising trendline signalling the buyers are active on every dip in the stock.
The bullish range shift on the weekly RSI scale strengthens the trend.
#5 Jindal Saw Limited
Steel major Jindal Saw has hit a 52-week high of ₹179 last week and is trending bullish on the charts.
On the weekly chart, the stock has surpassed the 2018 high of ₹162 and has accelerated the bullish momentum.
As the market is trending and the stock is trading at highs, the retracement seems like a convincing buy-on-dip strategy.
#6 Karnataka Bank Ltd (KTK Bank)
Karnataka Bank is one of the stocks which ticks all the check boxes on the chart for a bullish trend.
On the weekly chart, the breakout from the multiple highs on the line chart has been retested around the ₹130-145 zone.
The stock is hovering around the breakout retest levels as the markets are trending lower.
On the weekly and daily chart, the trend is bullish but the dip to ₹135-140 zone seems a favourable low risk – high reward entry point for investors.
#7 NTPC
NTPC has been leading in the power space and the stock hit a 52-week high of ₹182 recently.
The stock has also broken the 14 years range from 2008 to 2020 indicating a stronger bullish trend.
On the daily chart, accumulation is seen at the test of the 200 DMA (orange line).
The slope of the RSI is also trending northwards indicating a bullish scenario on the weekly and daily charts.
#8 Power Finance Corporation (PFC)
Another power stock, Power Finance Corporation (PFC) is trending bullish on the charts.
On the weekly chart, the breakout from two red lines has been acting as a demand zone.
The higher high – higher low bullish structure and the slope of averages trending northwards, indicate the bulls are in control of the trend.
Investors should add this stock to their watchlist.
#9 GAIL India Ltd
GAIL has been an outperforming stock in the energy space since February 2023 even though markets are down.
The stock is on the verge of breaking out from a 5-year consolidation at ₹116.
The RSI on the weekly chart is forming a higher high indicating strength in the momentum.
The breakout from the previous swing high of ₹103 signals that momentum may take the stock higher.
So there you go…
A list of 9 stocks which are trending bullish and outperforming in a weak market.
Investors and traders should keep in mind the risks involved as there is a bearish tone on Dalal Street.
If you're interested in being part of my charting journey as I share how to create wealth from the profitable trade setups, join my telegram channel – Fast Profits Daily. You'll get access to thebest trading ideasin the stock market.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com