Election results are done and dusted. Cabinet formation will be announced on Mon. Apr 26. Then will come the budget and policy announcements. Those will be the next triggers for the next leg of the stock market’s move.
The brief lull in the political front is being utilised by market players to indulge in sector rotation and portfolio churning. FIIs are in a profit booking mood. Emphasis has shifted from the defensive sectors. Many mid-cap and small-cap stocks suddenly find themselves in the limelight.
Charts of four such stocks are given below. The first two of them have been in bull territory for the past few months. The last two have recently emerged from bear grips. Sudden sharp news-based price spikes do not sustain. So, do your homework if you decide to buy or sell.
Atul Ltd
Atul’s stock had entered bull territory back in Oct ‘13, but remained in a sideways consolidation mode till Apr ‘14. Good Q4 results led to a high volume price spike earlier this month, followed by a small sideways consolidation within a ‘flag’. The upward break out from the ‘flag’ was on news of a stake sale. Technical indicators are looking overbought. Some correction or consolidation is likely. The stock may head higher thereafter.
GATI
The stock of GATI was in a sideways consolidation in bear territory before returning to a bull market in Dec ‘13. Sharp up moves in Jan, Mar and Apr ‘14 were followed by sideways consolidations. The latest up move was on news of FII stake buy. Technical indicators are bullish but looking a bit overbought and showing negative divergences. Expect some consolidation before the next up move.
I.G. Petrochem
After a small ‘double-top’ formed at 44 back in Oct ‘12 (not shown in chart), the stock of IG Petro entered a long bear spell from which it finally emerged into bull territory last month. A bullish ‘rounding bottom’ pattern led to a high volume price spike. Today’s sharp jump with an upward ‘gap’ was on news of turnaround Q4 results. Technical indicators are looking quite overbought. The ‘gap’ may get partly or fully filled before the next up move starts. Time to take some profits.
Rane Brake
Rane Brake’s stock had few takers as it meandered sideways on very low volumes. It drifted into bull territory in Feb ‘14 and continued its gradual up move till a high volume price spike took it past the 150 level. A correction followed but found support from the 50 day EMA. An upper circuit yesterday and a high volume gap-up move today was on news of good Q4 results. Technical indicators are looking quite overbought. The stock price has doubled in 4 months – making it a profit-booking candidate.
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