Last Updated on Sep 6, 2022 by Anjali Chourasiya
This article is authored by Kunal Rambhia, a fund manager at The Streets, a private fund. He has been in the equity market since 2010, in various roles such as Associate Research Analyst, Research Analyst, and Associate Portfolio Manager. He has media appearances with CNBC and ET NOW and is a visiting faculty in multiple colleges.
Markets have turned stock specifics. Extra strength is witnessed on indices, and counters have done good so far. Till we get further clarity, I would prefer to go stock specifics where the risk-reward is favourable, and bargain bets are available. One of such counters is Aarti Drugs. Let’s go through all observations.
Table of Contents
Monthly: Time cycle
When natural cycles are not clearly visible, then taking the help of Fibonacci makes a lot of sense. The first swing is taken to plot Fibonacci lines on the monthly chart. We can see multiple waves exactly near to/onto turning waves. Such time is due again in the present month/coming month for Aarti Drugs. Worth keeping an eye on this.
Monthly: Channels
Since its inception, the counter has just moved perfectly within channels. All channels have just perfectly made a positive trend, making higher tops and higher bottoms. On channel breakout, the strong trend of decades may continue again.
Weekly: Fibonacci
A massive rally was witnessed in the counter during 2020, and the correction began after making top during September 2020. The correction seems to be ending near 61.8% as the price is entering consolidation. Sideways consolidation of more than six months is adding more conviction.
Weekly: RSI
Curve formation on the weekly chart coincides with rising RSI. The beginning of the curve had a rising RSI, which is still continuing upside. This bullish divergence is icing on the cake during decent consolidation.
Weekly: MACD
MACD is a lagging indicator. After a massive run-up, MACD crossover confirmed the top in place. After a sizeable decline, MACD is turning upward from extreme lows. Crossover, along with bullish divergence on a lagging indicator, is making the counter more attractive.
Weekly: Supertrend
Another indicator following the trend is the supertrend. Supertrend offers support and resistance. The most recent bounce on the counter exactly halted on Supertrend. The best trade can be the time when the price breakout is confirmed. For trend followers, it would make sense to wait for the breakout of the 490 zones.
Daily: Price action & RSI
Massive curve formation on the daily chart and higher bottom of RSI is forming a situation of bullish divergence. In curve formation, it would always make sense to avoid breakouts and prefer to add on support.
Daily: Ichimoku
Another indicator following a fantastic trend is Ichimoku. Multiple ways to read indicators, out of which one is Kumo Cloud crossover. Price attempted Cloud breakout during April 2022 but failed. This time, it has given breakout and sustained too. Cloud breakout is the first sign of trend reversal, and follow-through will confirm the rally.
Putting it all together
Fibonacci cycle plotting on the monthly chart, channel formations since inception on the same higher timeframe, Fibonacci retracement of 61.8% of the last rally, bullish RSI divergence on the weekly chart and bullish divergence & crossover on MACD are making the counter very attractive. Supertrend breakout has to be kept in mind for trend followers. The curve formation with bullish RSI divergence and cloud breakout of Ichimoku on the daily chart is making it worth considering, even from a short-term point of view.
Statutory Disclosure: Kindly note that this update is only for educational purposes. It is safe to assume that my personal position, my fund’s position, my client’s position and my relative’s position may be open on the counter. Prefer to take the advice of your financial advisor before initiating any position.
- Avenue Supermarts: Is Dmart Providing Shopping Opportunities for Portfolios? - Mar 29, 2023
- GMR Airport Infra: Counter on Runway To Fly Soon! - Mar 21, 2023
- SW Solar: Is The Counter A Good Bet From Long-Term Perspective? - Mar 14, 2023
