Bajaj Auto, Ambuja Cements, ICICI Prudential Life, ABB and Zydus Life are showing strong technical setups and could be better positioned for relative outperformance.
Traders may consider switching into these names against Eicher Motors, UltraTech Cement, SBI Life, Larsen & Toubro and Torrent Pharma, respectively, Asit C. Mehta Investment Interrmediates said in a note.
“With range bound-to-negative view on the markets, we believe it’s prudent to have exposure not just in right sectors but within sector also in the right stocks. We have identified few stocks in different sectors within NSE 100 group where relative outperformance can be witnessed,” it said.
ICICI Prudential Life
In the case of ICICI Prudential, the stock is currently trading near a critical support zone, formed by the confluence of the long term ascending trendline and the 200 EMA, both of which have historically served as reliable bullish reversals.
“The Stochastic Oscillator is in the oversold territory, indicating that a potential price reversal from hereon. Additionally, the price structure continues to form higher lows, signaling strength in the underlying trend. This setup presents a low-risk, high-reward opportunity for positional traders anticipating an upside continuation,” Asit C Mehta said.
In contrast, it said SBI Life has witnessed a prolonged overextended rally and is now showing signs of exhaustion. In line with historical references, the brokerage expects ICICI Pru Life to outperform SBI Life by approximately 13-15 per cent over the next 6 to 8 months.
Ambuja Cements
In the case of Ambuja Cements, the stock has recently recorded a breakout from the consolidation and currently is trading near the neckline of the breakout. The momentum indicator is forming higher highs and lows suggesting bullish momentum in price.
“The prices are expected to resume it upmove hereon and gradually inch higher towards its previous swing high zones,” Asit C Mehta said while expecting Ambuja Cements to outperform UltraTech Cement by nearly 18-20 per cent over the next 6-7 months.
ABB India
This stock is showing early signs of recovery after a steady decline of over 18 per cent in the past five weeks. The decline has stalled at the Potential Reversal Zone (PRZ) of a bullish Harmonic pattern, coinciding with the demand zone of 4900-5000. At this confluence, the stock has formed the narrowest 21-week candle, indicating exhaustion of selling pressure.
“We anticipate a swift mean reversion from this setup. On the lower timeframe chart, the momentum indicator RSI has registered a bullish divergence against price, reinforcing the emerging bullish bias,” Asit C Mehta said.
ABB is seen relatively outperforming L&T by around 13-15 per cent over the next 8-10 months.
Bajaj Auto
After experiencing a sharp 45 per cent correction from its all-time high, Bajaj Auto has established a strong base near the 61.8 per cent Fibonacci retracement level and has begun to rebound from this key support zone.
The RSI has also bounced off the 50 mark, a crucial level that often signals a shift in momentum. Sustaining above this threshold indicates renewed bullish strength and potential for further upside, Asic C Mehta said.
“Additionally, the recovery is backed by strong volumes on the weekly chart, reflecting robust market participation and reinforcing the bullish outlook,” it said.
Eicher Motors is currently trading at the upper boundary of a well-established rising channel, which often acts as a strong resistance level, Asit C Mehta said as it sees 12-14 per cent Bajaj Auto outperformance over Eicher Motors over the next 8-10 months.
Zydus Life
Zydus Life has bounced off a significant polarity support zone that aligns closely with the 20 month EMA, indicating the long-term uptrend remains intact. The stock has registered a breakout from an inverted head and shoulders pattern on the weekly timeframe, this breakout is also supported by a noticeable increase in trading volumes, confirming strong buying interest. RSI has witnessed a breakout above bullish zone (60) indicating overall strength and momentum in price.
Torrent Pharma, on the other hand made a bearish harami pattern on monthly chart, indicating indecision and signaling a possible reversal or pause in the uptrend.
“We expect Zydus Life to relatively outperform Torrent Pharma by around 14 per cent over the next 8-9 months,” Asit C Mehta said.