On the up: Check out the stocks that could be breaking out

by 5paisa Research Team Last Updated: Dec 14, 2022 - 01:04 am 41.9k Views
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The Indian stock market is seeing some consolidation after a correction that shaved off nearly a tenth of its value from its peak a couple of months ago. Although many stocks have retained their investment flavour, some have now settled at a lower level while a few are sinking further as the liquidity overflow recedes.

Investors looking at charts and price and volume patterns have various parameters to decide whether a stock is ripe for the pick or is showing signals of weakness and is best left untouched.

One of the simpler technical marks to pick or move away from a stock is to see which ones are moving above their first resistance level. This level is based on the principle of pivot points. This, in turn, is calculated from the high, low and closing share price of the previous day, as an average of the three.

Once we have a pivot price point, we can use that to derive resistance and support price levels. Resistance levels are higher bars from the pivot points. If a stock crosses a resistance level it could be poised for an upward movement. On the flip side, if the pivot point slides below the support level it could sink further.

Resistance levels are by default above the pivot point while support levels are below it.

Traders also have different resistance and support levels These are stepped up or down levels of the same principle so a stock would have R1, R2 and R3 levels, depicting resistance, and concurrently S1, S2 and S3 for support.

We ran an exercise to see which stocks have moved beyond their R1 and could be set for an upward breakout.

The list of stocks whose pivot point has surpassed their first resistance zone include tyre maker MRF, Honeywell Automation, Abbott India, Bajaj Finserv, Tasty Bite, Bharat Rasayan, Sanofi India, HLE Glasscoat, Forbes & Co and Tata Elxsi.

This packs also has the country’s top healthcare services firm Apollo Hospitals, top diagnostics chain Dr Lal PathLabs and a clutch of drugmakers—Dr Reddy’s Labs, Divi’s Labs and Alkem Labs.

Among the other stocks that meet the criteria, there is two-wheeler maker Bajaj Auto, HR services firm TeamLease and Sleepwell mattress maker Sheela Foam.

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