Bajaj Finserv, Atul, Titan show dragonfly doji pattern and potential upside

The Indian stock market has been trying to form a new bottom at about 15% below the peak level attained a few times over the last twelve months. Bearish sentiments globally have meant the bulls are not able to get a handle on the direction of the market despite the stocks coming into a fair value zone.

Investors who bank on technical analysis or patterns in the price and volume movements of a stock(s) typically use candlestick charts or use it along with other parameters to predict price movements of stocks in the future.

One such parameter is the ‘dragonfly doji’, a Japanese candlestick pattern which hints at the possibility of a trend reversal. On the candlestick chart it has a ‘T’ shape due to a trading day that starts with a decline and then a reversal to close right near the opening price.

If we twine it with a bearish trend, just like the market has behaved in the recent past, it could suggest some stocks that could see an uptick.

If we apply this to the Nifty 500 list of stocks, we get a set of eight companies. Of these, there are five large caps: Bajaj Finserv, Atul, Titan, Indraprastha Gas and Zydus Lifesciences.

Tata Coffee, EPL and Rain Industries are the smaller names in the pack.

In addition, there are around 120 small and mid-cap stocks with the dragonfly doji pattern.

BEML, Sadhana Nitro, Anand Rathi Wealth, Jindal Saw, Hindustan Oil, Savita Oil, Madhya Bharat Agro, GMR Power, Expleo Solutions, Lumax Auto and Mangalore Chemicals are the others stocks with the dragonfly doji and having a market cap upwards of Rs 1,000 crore.

Lower down the stack are stocks like TTK Healthcare, Sastasundar Ventures, Ultramarine & Pigments, Goodluck India, Timex Group India, VLS Finance, FCS Software Solutions, Radhe Developers, AGI Infra and Toyam Industries.