Big movers on D-Street: What should investors do with RIL, HCL Tech and HDFC Life?

The benchmark BSE Sensex jumped nearly 592 points amid a strong trend in global markets while the Nifty reclaimed the share 25,000 level on Monday.

Among the stocks in focus were RIL, which gained 0.047%, HCL Tech, which rose 1.4%, and HDFC Life, whose shares gained 2.4% on Monday.

Kushal Gandhi, technical analyst at Stoxbox, recommends what investors should do with these stocks when the market resumes trading today.

RIL

The current trading pattern of Reliance Industries share price shows a period of consolidation in the 15% range, lacking a clear directional bias. Price action analysis shows a fair value area between 2810-2705, which serves as a demand zone. The stock price is currently below its 200 daily MA (moving average), which requires continuous maintenance of the specified support zone to minimize potential losses.

The upcoming quarterly results announcement by this heavyweight Nifty component is expected to influence the stock movement. Despite the current favorable risk-to-reward ratio, caution is advised due to relatively weak relative strength compared to Nifty50, EPS strength, buyer demand and less favorable technical indicators.

Hence, it is recommended to stay away from buying the stock and wait for confirmation of price action reclaiming its 200 daily MA, which now acts as immediate overhead resistance near 2912.

HCL Tech

HCL Tech’s stock is exhibiting strong market leadership characteristics, as evidenced by strong price action and improved relative strength compared to the Nifty50. Pattern analysis on the daily timeframe shows a bullish breakout from a mini-rounding pattern formed above the primary accumulation pattern, suggesting potential further accumulation.

The relative strength of the stock is improving compared to the Nifty50, and volatility is at low levels, reducing the possibility of erratic movements. Additionally, relative strength indices are trading well above their medians in the daily and higher time frames, indicating momentum in the price. Notably, the company is set to announce its quarterly earnings, and the positive commentary is expected to strengthen the upward trend.

Price action finds immediate support in the 1810-1790 zone, where the 20 DMA is also trading, which is expected to provide immediate support. Sustaining above this zone will lead to further bullish momentum. Our recommendation is to buy HCL Tech with a target price of 2040 and maintain a stop loss at 1766.

HDFC Life

Shares of HDFC Life recently experienced a period of profit booking, pulling back nearly 9% after rallying 49% from June 2024 lows. This suggests that existing investors are committed to the stock, limiting downward momentum. Analysis of the daily timeframe indicates a bullish breakout from a double-bottom pattern, signaling a possible trend reversal.

The stock has shown improved relative strength compared to the Nifty50 and reduced volatility over the last 50 days, which is a positive development. Relative strength indices in the daily and higher time frames indicate momentum in price and EPS strength has seen improvement, indicating positive fundamentals.

With the 50 DMA as immediate support, the stock presents a favorable risk-to-reward opportunity. We recommend buying the stock with a target price of 820 and maintaining a stop loss at 703.

(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)