Today I will talk about Vedanta Ltd (NS:VDAN) and Escorts Ltd (NS:ESCO) as I believe investors ought to keep a keen eye on the stocks in the coming days as they are presently at their critical support levels.
Coming to Escorts, the stock is trading in a box range pattern for the prior three weeks which is a remarkable feat as within this same time period the Indian financial market has been getting hammered by the bears. However, investors looking to go long or short on the stock ought to wait. I say this as the stock presently has the potential of having a breakout on either side. If the stock were to break out on the downside, then investors ought to wait for it to break below the long-term candle support zone at Rs 444. This is as a break out below this level will ensure a fall till the Rs 365 price level. On the other hand on the upside, investors ought to wait for the stock to have a break above the resistance level at Rs 505 as this will be a tough zone to crack. Nevertheless, investors going short or long in the current market ought to keep a keen eye on the supposed relief package that is meant to come from the government. This is as if it comes soon then the market will have a sharp reaction that can burn out any position depending on the significance of the relief provided.
Coming to Vedanta, we see that the stock is also trading in a box range pattern. The first box range pattern the stock is trading in is between Rs 134 and Rs 145. Moreover, the second box range pattern the stock is trading in is between Rs 134 and Rs 180. Coming to the future of the stock, I would not advise any investor to go long or short on the stock until it provides additional confirmation. This is as any long position can only be taken once the stock breakouts from the first box range. However, the breakout ought to be confirmed by a second technical indicator. On the downside, if the stock were to break below the support zone between Rs 120 and Rs 135, then traders may have a juicy short. But as mentioned above, keep a keen eye on any change in stance the government may have in terms of policy in the coming days.
In conclusion, trading in the stocks mentioned above is a double-edged sword as the risk factor is presently very high. Hence, I would advise investors to take smaller positions. Moreover, investors trading in the derivatives segment ought to keep a keen eye on the volatility level in whatever they are trading. Lastly, keep a track of the Twitter handle as everyday new charts will be uploaded and you may join the free Telegram channel posted on my Twitter handle.
Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Therefore, you must trust your analysis and judgment the equity before making investment decisions. The report provided is for informational purpose only and should not be interpreted as a proposition to buy or sell any securities.