D-Street Week Ahead: Nifty Extends Rebound; Godfrey Phillips signals a breakout after the formation of a base

After a one-day breather, markets started their recovery and extended their run while ending the day on a positive note. Nifty opened higher and gradually continued building on the day’s opening gains. No major selling pressure was seen and markets maintained their gains throughout the session. The headline index closed with a net gain of 275.50 points (+1.16%).

The cigarette maker has shown major support formation over the past few weeks. As indicated by technical indicators, the stock is set to move higher from its current levels, leading to a possible trend reversal in the stock.

ETMarkets.com

After being in a corrective downtrend for a few months, GODFREYPHLP made a base for itself in January this year. This base formation occurred when the RSI made a bullish divergence against the price. Over the past week, the stock has traded sideways while remaining disconnected from market moves on both sides.

The daily MACD has turned positive over the past few days; It is now bullish and above its signal line. A widening histogram indicates increasing momentum on the upside. The RSI has formed a new 14-period high, which is bullish.

Relative strength indicates a major trend change. After flattening, the RS line has started to move higher and has crossed above its 50-period MA. The stock has turned inside RRG’s leading quartile; This will ensure relative outperformance of the stock in the coming days.

OBV formed a new high before the price breakout. This bullish divergence indicates a strong rally in the stock when it forms a base.

The expected move in GODFREYPHLP will take it to Rs. can take up to 2,300 is. Closed at a low of Rs. 2,030 will reject the current technical setup.

Milan Vaishnav is a CMT, MSTA, Technical Analyst and Founder of EquityResearch.asia and ChartWizard.ae and is based in Vadodara. He can be contacted at milan.vaishnav@equityresearch.asia