ICICIdirect has recommended three technical stock ideas with potential to provide decent return from a medium term perspective. It has selected Karnataka Bank, Shivam Auto and Rajasthan Spinning as stock picks. ICICIdirect gave following rationale and trading strategies:
1. Karnataka Bank
Trading strategy: Buying is recommended in range of Rs 142-148 with target of Rs 180 higher and stop loss of Rs 130.
Rationale: ''The share price is at the cusp of a multi year consolidation break out which offers fresh entry opportunity. The sharp rally over last week has led prices to retest its 2013-2014 swing highs placed around Rs 150 levels. After hitting a major trough around Rs 70 during August 2013, the stock price is seen resisting at Rs 150 on multiple occasions. However, during this period, share price has consistently made higher troughs 118 indicating positive price bias over medium term.
We expect stock price to break above the 2013- 2014 highs and head towards Rs 180 being the measuring implication of a consolidation range measuring implication of a consolidation range of past two years (150-120=30 points) as projected from the breakout points (150+30=180).''
2. Shivam Auto
Trading strategy: Buying is recommended in range of Rs 117-121 with target of Rs 147 and stop loss of Rs 108.
Rationale: ''The share price has registered a breakout from falling channel signalling fresh momentum and offers fresh entry opportunity. The stock has a tendency of forming higher troughs near 50-day EMA while past two rallies have been similar in magnitude (50 points each) .The stock in the first week of June 2015 has formed base at the 50 days EMA and is seen breaking out of a falling channel, thus offering fresh entry opportunity to ride the ongoing uptrend from a medium term perspective.
We expect the stock to head towards Rs 151 levels in the medium term being the measuring implication of 50 points from the recent trough of Rs 101.''
3. Rajasthan Spinning
Trading strategy: Buying is recommended in range of Rs 249-255 with target of Rs 302 and stop loss of Rs 227.
Rationale: ''The share price has posted a sharp rally over past couple of sessions thereby completing faster retracement of six week falling segment in just one week. Such price action clearly sets bullish tone and signals resumption of up trend. The corrective decline from life high of Rs 286 found the active buying support nears Rs 220 being confluence of rising 52-weekl EMA (Rs 213) and 61.8% retracement of preceding rally (Rs 181-286).
We believe the stock offers a good reward/risk set-up to ride the next up move. We expect the stock to head towards Rs 302 levels in the medium term being 123.6% retracement of most recent corrective leg (Rs 286-217).
Volume behaviour is supportive of a (Rs 286 217) continuation of trend as participation is seen expanding during rallies above 52-week average (1.9 lakh).''
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