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Stock name: LIC Housing Finance Ltd.

Pattern: Double bottom pattern

Time frame: Weekly

Observation:

Since June 2017, the stock has experienced a downtrend. From July 2019 to January 2024, it stabilized and exhibited a double bottom pattern on the weekly chart. In early January 2024, the stock broke out from the pattern with above-average trading volume, leading to an upward movement. The current overbought zone RSI suggests a potential retest. As per technical analysis, if the stock maintains its momentum, then it may see further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Astral Ltd.

Pattern: Flag and pole pattern

Time frame: Weekly

Observation:

Between April and June 2023, the stock underwent a swift upward surge. Following that, it entered a consolidation phase until February 2024, forming a flag and pole pattern on the weekly chart. The breakout from this pattern happened in February 2024, marked by significant trading volume and a positive MACD indicator signal. The RSI levels of the stock are also in a favourable zone. As per technical analysis, the stock might experience additional upward movement, as long as it maintains its current momentum.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Reliance Industries Limited (RIL) has announced plans to invest Rs 5,000 crore in setting up compressed biogas (CBG) plants. The CBG plants aim to produce green energy by converting bio and organic waste into compressed biogas, contributing to the reduction of carbon emissions. This move reflects RIL's strategic focus on renewable energy initiatives, supporting India's push towards a cleaner and more environmentally friendly energy landscape.
  
  
• The Reserve Bank of India (RBI) has granted approval for HDFC Bank's proposal to sell a 90% stake in HDFC Credila to ChrysCapital and BPEA EQT. This strategic move by HDFC Bank aligns with its efforts to streamline its business operations. HDFC Credila, specializing in education loans, is expected to benefit from the expertise and support of ChrysCapital and BPEA EQT.
  
  
• State Bank of India (SBI) faces challenges in finding buyers for the Rs 1,703 crore bad debt linked to Hindusthan National Glass. Despite efforts, SBI's attempts to attract buyers for the distressed debt have not yielded positive results. SBI's struggle to offload the bad debt highlights broader challenges in the market and the financial sector's ongoing efforts to manage and resolve non-performing assets.

Stock name: Abbott India Ltd.

Pattern: Cup and handle pattern

Time frame: Weekly

Observation:

Experiencing an upward trajectory, the stock displayed a cup and handle pattern on its weekly chart from October 2021 to January 2024. A breakout from this pattern occurred in January 2024, backed by above average trading volume and a positive MACD indicator signal. Following the breakout, the stock is advancing in an upward direction. With the current RSI levels in the overbought zone, the stock may see some retest. According to technical analysis, the stock may continue its upward movement if it sustains its current momentum.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Adani Green Energy Ltd.

Pattern: Flag and pole pattern

Time frame: Daily

Observation:

Following a long period of stabilization and sideways movement, the stock exhibited a rapid upward surge between November 23, 2023, and December 7, 2023. Subsequently, the stock resumed consolidation until February 2024, resulting in the development of a flag and pole pattern on the daily chart. A breakout from this pattern occurred on February 7, 2024, accompanied by substantial trading volume and a positive MACD indicator signal. The stock is currently on an upward trajectory post-breakout, supported by favourable RSI levels. Based on technical analysis, the stock may see further upward movement if it sustains its present momentum.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Shriram Group is reportedly planning to raise up to Rs 2,400 crore to acquire a stake in its group companies currently held by Piramal Enterprises. The move aims to facilitate Shriram's buyback of the stake from Piramal and strengthen its position in various subsidiaries. The fundraising strategy involves a mix of debt and equity. Shriram Group has a diverse presence in sectors such as finance, insurance, and infrastructure, and this financial manoeuvre is expected to impact its strategic positioning within the conglomerate.
  
  
• Bandhan Bank has appointed Rajeev Mantri, formerly associated with Citi India, as its Chief Financial Officer. This strategic hiring signals the bank's focus on strengthening its financial leadership and management. Rajeev Mantri brings his expertise from Citi India to the role, and his experience is expected to contribute to Bandhan Bank's financial strategies and operations.
  
  
• Grasim Industries has entered the paint business with the launch of 'Birla Opus.' The company aims to secure the second-largest position in the Indian paint sector through this venture. Grasim Industries, part of the Aditya Birla Group, is diversifying its portfolio with this strategic move into the competitive paint industry. 'Birla Opus' will offer a range of paint products, and Grasim is set to leverage its brand reputation and distribution network to establish a significant presence in the market.

Stock name: MphasiS Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Weekly

Observation:

Since October 2021, the stock experienced a decline, but between June 2022 and December 2023, it stabilized and exhibited a cup and handle pattern on the weekly chart. In December 2023, there was a breakout, supported by substantial trading volume and a positive MACD indicator. Although the stock showed a modest upward movement post-breakout, it is currently undergoing a retest. The RSI has cooled down to a favourable level. According to technical analysis, a successful rebound from the retest may propel the stock further upward.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Motilal Oswal Financial Services Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

Since January 2018, the stock has been on a decline, but it began recovering from March 2023. In January 2024, it reached its January 2018 level. Over the period from January 2018 to January 2024, the stock formed a rounding bottom pattern on the monthly chart, breaking out in January 2024 with significant trading volume. However, the rapid upward movement has placed the stock's RSI in the overbought zone, suggesting a potential retest of the breakout level. According to technical analysis, if the stock can sustain its current momentum, further upward movement may be expected.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• JK Cement has successfully completed the acquisition of Toshali Cement in Odisha, India. The acquisition marks a strategic move by JK Cement in the industrial goods sector, specifically in the cement industry. The completion of this acquisition further strengthens JK Cement's market presence and may contribute to its expansion plans.
  
  
• ITC is reportedly considering the acquisition of a 47% stake in Prataap Snacks, the maker of popular snack brand 'Yellow Diamond.' Private equity funds are also said to be exploring opportunities to invest in Prataap Snacks. If successful, this move could lead to significant changes in the competitive landscape of the Indian snack food sector. Prataap Snacks has established itself as a key player, and an investment from ITC could enhance its growth prospects.
  
  
• SpiceJet has bolstered its financial position by raising an additional Rs 316 crore through fundraising. This move is part of the airline's ongoing efforts to strengthen its financial resilience. SpiceJet has faced challenges in the aviation industry, and the latest fundraising is expected to provide the company with much-needed liquidity. The successful fundraising may contribute to the airline's operational stability and strategic initiatives in the competitive aviation sector.

Stock name: Timken India Ltd.

Pattern: Double top pattern

Time frame: Weekly

Observation:

Following the market's rebound after the COVID-19 pandemic, the stock exhibited a consistent upward trend. While it briefly stabilized in 2023, a double top pattern emerged on its weekly chart from April 2023 to February 2024. February 2024 witnessed a breakout from this pattern, backed by a marginally higher trading volume and a bearish signal from the MACD indicator. Subsequently, the stock has entered a downward trajectory, with its RSI hovering just above the 35 level. According to technical analysis, the stock might continue its descent if the current momentum persists.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: FDC Ltd.

Pattern: Cup and handle pattern

Time frame: Weekly

Observation:

The stock has been on a sideways trend for a long period of time. From July 2021 to January 2024 the stock has formed a cup and handle pattern on its weekly chart. In January 2024, the stock experienced a breakout from this pattern, aided by substantial trading volume and a positive MACD indicator signal. According to technical analysis, should the stock sustain its existing momentum, it may see continued upward movement in the future.|

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Reliance Industries, under the leadership of Mukesh Ambani, is set to introduce "Hanooman," an artificial intelligence (AI) model, in India by March. This AI model, designed to enhance operational efficiency, has already been successfully deployed in various Reliance businesses. Known for its robust capabilities, Hanooman is expected to play a significant role in advancing technological applications within the conglomerate.
  
  
• NTPC's subsidiary, NTPC Green Energy Ltd (NGEL), has entered into a partnership with Andhra Pradesh (AP) to establish India's largest green hydrogen production facility. This collaboration aims to advance the development of renewable energy infrastructure, particularly in the form of green hydrogen. The facility is expected to contribute significantly to the nation's green energy goals.
  
  
• Tata Steel and JSW Steel are among the prominent bidders participating in the commercial coal block auction for mines in India. The auction, facilitated by the government, aims to attract investments and boost domestic coal production. Several leading steel companies, including Tata Steel and JSW Steel, are vying for the rights to develop and operate these coal mines.

Stock name: Indian Oil Corporation Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

Experiencing a recent upward movement, the stock now exceeds its 2017 levels. The stock has seen a decline since September 2017 and has recovered now. The monthly chart shows a rounding bottom pattern, and a breakout occurred in February 2024. Though the candle of February month is not completed, the stock has seen a significant breakout along with huge trading volumes. However, the stock's RSI levels signal deep overbought conditions. As per technical analysis, the upcoming days may see a retest of the breakout, and successful rebound may lead to further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: PNC Infratech Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Weekly

Observation:

The stock has consistently trended upward, and between October 2021 and January 2024, it formed a cup and handle pattern on the weekly chart. January 2024 witnessed a breakout from this pattern, accompanied by above-average trading volume and a positive MACD indicator signal. Following the breakout, the stock moved upward but is currently undergoing a retest. The RSI level of the stock has cooled down due to this pullback. According to technical analysis, a successful rebound from the retest may propel the stock further upward.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• JSW Steel is reportedly in discussions to acquire a $1 billion stake in Australia's Blackwater coal mine. The potential investment marks JSW Steel's interest in securing a stake in the mining sector and expanding its presence in Australia. If the deal materializes, it could enhance JSW Steel's access to key resources for its operations. The talks indicate a strategic move by JSW Steel to strengthen its position in the global metals and mining industry.
  
  
• TVS Mobility has formed a joint venture with Mitsubishi Corp to create a comprehensive vehicle mobility ecosystem in India. The collaboration combines TVS Mobility's expertise with Mitsubishi Corp's global experience to develop innovative solutions for the Indian mobility sector.
  
  
• Zee Entertainment and Sony Pictures Networks are reportedly in talks to salvage their proposed merger after facing challenges. The media giants are engaged in discussions to address issues that have arisen during the merger process, indicating efforts to find a resolution and proceed with the high-profile deal.

Stock name: PVR INOX Ltd.

Pattern: Head and shoulders pattern

Time frame: Weekly

Observation:

The stock's overall trajectory has been positive. It has stabilised between the period from May 2021 to February 2024. During this period, a head and shoulder pattern emerged on the weekly chart, followed by a breakout in February 2024. This breakout was supported by slightly above average trading volume. Post-breakout, the stock is now trending downward. Technical analysis suggests that if the momentum from the breakout is sustained, then the stock may see further downward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Ingersoll Rand (India) Ltd.

Pattern: Cup and handle pattern

Time frame: Daily

Observation:

The stock is currently on an upward trajectory. It has formed a cup and handle pattern on its daily chart between August 2023 and February 2024. A significant breakout from this pattern occurred on February 16, 2024, accompanied by substantial trading volume. The stock is presently aligning with the direction established by the breakout. Technical analysis indicates that if the stock can sustain this breakout momentum, then it may see further upward movement in its value.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Adani Group is in advanced talks to raise $2.6 billion for infrastructure and green projects, considering a stake reduction in airport and green hydrogen units. The conglomerate, recently resilient after overcoming challenges, aims for an Ebitda of Rs 80,000 crore this fiscal year and has attracted investments from GQG Partners, QIA, and TotalEnergies.
  
  
• Mahindra & Mahindra has signed a supply agreement with Volkswagen Group for components to boost its INGLO electric platform, incorporating electric elements from Volkswagen's MEB and unified cells. The deal spans several years with a total volume of approximately 50 GWh. Mahindra plans to launch five all-electric SUVs in India through INGLO starting December 2024.
  
  
• Tata Power is set to acquire the Jalpura Khurja Power Transmission project for Rs 838 crore, following a letter of intent from REC Power Development and Consultancy. The project's special purpose vehicle will be developed on a build-own-operate-transfer basis, offering transmission services for 35 years from the scheduled date of commercial operation.

As the interest of investors in increasing towards Stock Markets, people are constantly seeking tools and indicators to help them make informed decisions. One such tool that has gained significant popularity among traders is the Relative Strength Index (RSI). RSI is a momentum oscillator that measures the speed and change of price movements. In this blog, we'll delve into what the RSI indicator is, how it can be used, its interpretation, and its limitations.

So, lets begin.

What is the RSI Indicator?

The Relative Strength Index (RSI) is a technical indicator used in financial analysis to assess the strength or weakness of a financial instrument's price movements. It is a from 0 to 100, and is calculated using the formula:

RSI = 100 − (100/1+RS)

Where RS (Relative Strength) is the average gain divided by the average loss over a specified period. Typically, the RSI is calculated over a 14-day period, but this can be adjusted depending on the trader's preference and the timeframe being analysed.

The good news here is, you don’t need to calculate it, it is available as an indicator (generally appears plotted beneath the graph of an asset’s price) on most of the broker’s app and market analysis websites.

How Can It Be Used?

1. Overbought and Oversold Conditions:

One of the primary uses of the RSI is to identify overbought and oversold conditions in the market. When the RSI crosses above 70, it is often interpreted as the asset being overbought, suggesting a potential reversal or pullback in price. Conversely, when the RSI falls below 30, it is considered oversold, indicating a possible price rebound.

2. Divergence Analysis:

Another way traders use the RSI is by analysing divergences between the RSI and the price movement of the asset. Bullish divergence occurs when the price makes a new low, but the RSI does not, suggesting a potential reversal to the upside. Conversely, bearish divergence occurs when the price makes a new high, but the RSI does not, indicating a potential reversal to the downside.

3. Confirmation of Trends:

The RSI can also be used to confirm the strength of a trend. In an uptrend, the RSI tends to stay above 50 and frequently finds support around the 40-50 level during pullbacks. In a downtrend, the RSI typically remains below 50 and often finds resistance around the 50-60 level during rallies.

Interpretation of RSI

Interpreting the RSI involves understanding its readings in relation to the market conditions and the specific timeframe being analysed. Here's a brief overview:

• RSI above 70: Overbought condition, potential sell signal.
• RSI below 30: Oversold condition, potential buy signal.
• Bullish divergence: Potential reversal to the upside.
• Bearish divergence: Potential reversal to the downside.
• RSI trends above 50 in uptrends and below 50 in downtrends.

Limitations of the RSI Indicator

While the RSI can be a valuable tool for traders, it is essential to acknowledge its limitations:

1. Lagging Indicator:

The RSI is a lagging indicator, meaning it relies on past price data. As a result, it may not always provide timely signals, especially in fast-moving markets.

2. Not Suitable for All Market Conditions:

The RSI works best in trending markets but may produce unreliable signals in sideways or ranging markets.

3. Subjectivity:

Interpretation of the RSI readings can be subjective, and traders may have different criteria for determining overbought and oversold conditions.

In conclusion, while the RSI indicator can be a powerful tool for traders to assess market momentum and identify potential trading opportunities, it is crucial to use it in conjunction with other technical analysis tools and consider its limitations. Like any tool in trading, the RSI is most effective when used as part of a comprehensive trading strategy and combined with sound risk management principles.

The relative strength index (RSI) is a momentum indicator used in technical analysis. It measures the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions in the price of that security.

If you love to understand the technical analysis that goes behind understanding the time of entry and exit, make sure to check out my course on Technical Analysis. Until next time!

Stock name: National Aluminium Co. Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

Over the prolonged period spanning from May 2008 to January 2024, the stock exhibited a rounding bottom pattern on its monthly chart. In January 2024, it exceeded its levels from May 2008, signalling a breakout from the rounding bottom with notable trading volume. Subsequent to the breakout, the stock is presently following an upward path. Technical analysis suggests that maintaining the breakout level may lead to a sustained upward trend in the stock.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Indiabulls Housing Finance Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Weekly

Observation:

Since 2018, the stock has experienced a downward trend. Between February 2022 and November 2023, a cup and handle pattern emerged on its weekly chart. Towards the close of November 2023, the stock successfully broke out of this pattern. Initially, it ascended, but it is presently undergoing a retest of the breakout level. Following this retest, the stock's RSI levels are currently at favourable levels. Technical analysis suggests that a successful rebound from the retest may propel the stock in an upward direction.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Cipla has partnered with CSIR-CDRI to develop a formulation for treating fungal keratitis, a severe eye infection. The collaboration aims to combine Cipla's pharmaceutical expertise with CSIR-CDRI's research capabilities to create an effective solution for this condition.
  
  
• Multiple payment banks are currently under investigation for suspected involvement in money laundering. Regulatory authorities are scrutinizing these institutions to ensure compliance with anti-money laundering regulations and to address concerns about potential misuse for illicit financial activities. The investigation reflects efforts to enhance oversight and mitigate money laundering risks in the banking sector.
  
  
• Reliance Industries is reportedly in discussions to acquire a 30% stake in Tata Play from Disney. The potential deal aims to bolster Reliance's television distribution and JioCinema services. The move suggests a strategic expansion in the media and entertainment industry, with Reliance seeking to strengthen its presence in the rapidly evolving market. If finalized, this acquisition could significantly impact the dynamics of television distribution and content streaming platforms in India.

Stock name: Indus Towers Ltd.

Pattern: Head and shoulders pattern and retest

Time frame: Daily

Observation:

Since April 2023, the stock has experienced an upward trend. Between January and February 2024, a head and shoulder pattern emerged on its daily chart. The pattern witnessed a breakout on February 12, 2024, leading to an initial downward movement. Presently, the stock is undergoing a retest of the breakout levels. The Relative Strength Index (RSI) is currently below 50. According to technical analysis, the stock may see further downward movement if it regains the breakout momentum.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: MMTC Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

Since its listing in 2010, the stock underwent a substantial downward trend. From July 2014 to January 2024, it stabilized and formed a rounding bottom pattern. In January 2024, the stock surpassed its July 2014 levels, marking a breakout from the rounding bottom pattern with robust trading volume. Following the breakout, the stock is currently on an upward trajectory. According to technical analysis, sustaining the breakout level may lead to a continued upward trend for the stock.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Hyundai is planning an initial public offering (IPO) in India as part of its expansion strategy and aims for a higher valuation. The South Korean automaker intends to raise capital through this IPO and further strengthen its presence in the Indian market.
  
  
• The Insurance Regulatory and Development Authority of India (IRDAI) is proposing key reforms in the insurance sector. They suggest extending the free-look period from 15 to 30 days, offering policyholders a longer duration for policy review. Additionally, IRDAI aims to establish an online marketplace called "Bima Sugam" to enhance digital accessibility within the insurance industry. These initiatives underscore IRDAI's commitment to consumer protection and the promotion of digital advancements in insurance.
  
  
• Indian authorities, including the Enforcement Directorate (ED), are reportedly issuing notices and requests to Paytm for customer information. The move is part of ongoing efforts to scrutinize financial transactions and ensure compliance with regulations. The ED's actions indicate a focus on obtaining crucial data from Paytm to aid in investigations and maintain financial transparency.