Apollo Hospitals
Recently, Apollo Hospitals has shown a bullish divergence on the 4-hour chart, indicating a potential reversal from a downtrend to an uptrend. This divergence is accompanied by the price action rising above the 21-period Simple Moving Average (SMA), which further strengthens the signal of a trend change.
A bullish divergence occurs when the price forms lower lows, but the underlying indicator (like the Relative Strength Index or RSI) forms higher lows, suggesting that the downward momentum is weakening, and a reversal may be imminent.
On the daily chart, Apollo Hospitals has formed a double bottom pattern at the 200-day Exponential Moving Average (DEMA), which is considered a strong support level. A double bottom pattern is a bullish reversal pattern that typically signals the end of a downtrend and the start of an upward move.
The 200 DEMA serves as a significant support level, adding credibility to the potential for a trend reversal. Given these technical signals, it is suggested to buy Apollo Hospitals in the range of Rs 6,030 to Rs 6,060. The target for this trade would be Rs 6,400, representing a potential upside. To manage risk, a stop-loss should be placed near Rs 5,865 on a daily closing basis.
Infosys
Recently, Infosys (Infy) has experienced a breakout after a period of consolidation within the range of Rs 1,350-Rs 1,450. This breakout suggests a potential shift in the stock’s trend and has generated interest among investors.
Currently, the stock is trading above this breakout range, indicating initial strength. However, it is advisable to exercise caution and adopt a wait-and-watch approach until the stock retests the top of the breakout range to confirm the breakout’s validity. If the stock successfully tests this level and holds, it will demonstrate the breakout’s genuineness and present a favourable opportunity for going long.
In this scenario, one could consider entering a long position in the range of Rs 1,465-Rs 1,470, targeting an upside move to Rs 1,550.
To manage risk, a stop-loss should be placed near Rs 1,435 on a daily close basis, ensuring that any adverse price movement is limited. This strategy balances the potential for gains with prudent risk management.
Divi’s Labs
In the current month, Divi’s Labs has surpassed its historical peak, which ranged between Rs 3,920 and Rs 4,075, a level it had reached during 2022 and 2024.
This breakthrough is significant as it indicates the stock has overcome previous resistance levels and is now positioned for potential further gains.
The fact that Divi’s Labs has managed to sustain its price above this range reinforces the likelihood of continued upward momentum. From a technical analysis perspective, the weekly stochastic oscillator, which helps identify overbought or oversold conditions, has reversed direction at the 55 level and has shown a bullish crossover.
This crossover occurs when the shorter-term stochastic line crosses above the longer-term line, suggesting increased buying pressure and supporting a bullish outlook. Based on these observations, it is recommended to take a long position in Divi’s Labs within the price range of Rs 4,485 to Rs 4,550.
The target for this trade is set at Rs 5,000, reflecting the anticipated upward potential. To manage risk, a stop-loss should be placed at Rs 4,275, ensuring that the position is exited if the price falls below this level to mitigate potential losses.
(Jigar S Patel is a senior manager of equity research at Anand Rathi. Views expressed are his own.)
First Published: Jun 11 2024 | 6:30 AM IST