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Stock name: PCBL Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

The stock experienced an upward trend after COVID but recently it has stabilized, forming a head and shoulders pattern on its daily chart. On June 4, 2024, amidst a significant market downturn, the stock broke out of this pattern. Currently, its RSI levels are in the oversold zone, which may suggest a potential retest of the breakout. According to technical analysis, if the stock sustains the breakout momentum, it may continue to decline.

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: Dr. Lal Path Labs Ltd.

Pattern: Double bottom pattern

Time frame: Weekly

Observation:

Since September 2021, the stock has been on a downward trend but has stabilized, forming a double bottom pattern on its weekly chart. Despite this, it has not yet broken out from the pattern. Recently, a bullish MACD indicator and favourable RSI levels have emerged. According to technical analysis, if the stock breaks out with strong momentum, it may move upwards.

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:

• Tata Motors' board has approved the creation of a wholly-owned subsidiary named TML Commercial Vehicles Ltd (TMLCVL) to manage its commercial vehicles business. This move is part of a broader strategy announced in March to demerge its commercial and passenger vehicle segments into two separate listed entities. The new entity will focus on the CV business and related investments, while the passenger vehicle segment, including electric vehicles and Jaguar Land Rover, will be managed by a different entity. Tata Motors has also announced a merger of Tata Motor Finance with Tata Capital, approved by their respective boards.
  
  
• Kalyan Jewellers India will acquire the remaining 15% stake in Candere from founder Rupesh Jain for Rs. 42 crore, making Candere a wholly-owned subsidiary. This move supports Candere's shift from e-commerce to omni-channel commerce. Initially acquiring a majority stake in 2017, Kalyan Jewellers aims to expand Candere's retail presence, with 11 new showrooms launched last fiscal year. The acquisition is part of Kalyan's strategy to grow in the lightweight, fashion-forward jewellery segment.
  
  
• Welspun Corp's associate company, East Pipes Integrated Company for Industry (EPIC), has signed contracts worth SAR 1.65 billion (approximately Rs 3,670 crore) with Saudi Arabian Oil Co. (Aramco) for the supply of steel pipes. These 19-month contracts will impact Welspun's financials from Q4 of FY 2024-25 to Q4 of FY 2025-26. EPIC is a leading Saudi manufacturer of Helical Submerged Arc Welded (HSAW) pipes.

Stock name: Alkem Laboratories Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

The stock has risen since its listing. However it has formed a double top pattern on the daily chart from December 2023 to June 2024. Despite being above the neckline, it has been declining due to a bearish MACD signal. The RSI level is also very low. Technical analysis suggests that if the stock breaks below the neckline, it may see further downward movement.

Stock name: CIE Automotive India Ltd.

Pattern: Inverse head and shoulders pattern and retest

Time frame: Daily

Observation:

Since July 2023, the stock has shown a mix of sideways and downward movement. Recently, it formed an inverse head and shoulders pattern on the daily chart, breaking out on May 21, 2024, with high volume and a bullish MACD signal. Currently, the stock is retesting the breakout level, which has cooled the RSI to a favourable level. According to technical analysis, if the stock rebounds from this retest, it might move 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:

• Mukesh Ambani's exclusive 5G deal in Ghana faces backlash from the National Democratic Congress (NDC). They argue that the $125 million, 10-year contract with Next Gen Infraco, which partners with Ambani's Radisys Corp., undervalues the 5G spectrum and deprives the debt-ridden nation of potential revenue. Critics claim a formal bidding process could have generated up to $500 million, highlighting the urgent need for foreign exchange and non-tax revenue.
  
  
• Uno Minda, a major auto parts supplier, has significantly outpaced industry growth, with its revenue increasing by 25.2% in FY24 and stock rising 37% recently. This success is driven by its lighting and light metal technology divisions, which contribute nearly 50% of revenue, and a strong focus on premium offerings and the electric vehicle (EV) segment. The company's kit value has seen substantial growth, particularly in premium bikes and SUVs. Uno Minda secured significant EV orders worth ₹3,755 crore in FY24 and plans to invest heavily in capacity expansion, maintaining a high valuation due to promising growth prospects.
  
  
• Adani Group and ICICI Bank have launched co-branded credit cards offering airport-linked benefits. Integrated with the Adani One app, these cards provide Adani Reward Points, lounge access, free air tickets, and duty-free shopping discounts. This venture marks Adani's entry into the financial sector, aiming to enhance customer travel experiences.

Stock name: Coal India Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

The stock has formed a rounding bottom pattern on its monthly chart from 2015 to 2024. A breakout from this pattern occurred in April 2024, followed by continued upward movement in the subsequent month. Currently, the RSI indicates that the stock is in the overbought zone, which could lead to a retest. However, technical analysis suggests that if the stock maintains its current momentum, it might move further upwards.

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: Engineers India Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Daily

Observation:

The stock has maintained an upward trend since April 2023. It formed a cup and handle pattern on its daily chart between April and May 2024. On May 14, 2024, the stock broke out from this pattern with a bullish MACD indicator and above-average trading volume. Following the breakout, the stock saw a slight upward move but immediately retested the breakout level, cooling off the RSI to favourable levels. According to technical analysis, if the stock rebounds from the current retest, it may continue to move 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:

• Tata Motors will demerge its commercial (CV) and passenger vehicle (PV) segments into separate listed entities to better capitalize on global opportunities. The CV entity aims to become more agile, while the PV entity will focus on EVs, Jaguar Land Rover, and related investments. The demerger is expected to enhance growth prospects and operational focus. Both segments anticipate continued strong performance, with a particular emphasis on expanding the EV market.
  
  
• Bharti Airtel chairman Sunil Mittal emphasized that Vodafone Idea (Vi) must settle past dues with Indus Towers to access new services like 5G. Airtel, holding a 48% stake in Indus, insists Vi must clear its ₹10,000 crore debt. While Indus may show flexibility if substantial payments and a repayment schedule are provided, Vi's ability to expand its 4G and roll out 5G depends on these payments. Recently, Vi raised ₹18,000 crore and plans further fundraising to upgrade its network and stop subscriber losses.
  
  
• OPEC+ has extended its substantial oil production cuts until 2025 to stabilize the market amidst slow demand growth, high interest rates, and increasing U.S. oil production. The group will maintain its current reduction of 5.86 million barrels per day (bpd). Mandatory cuts of 3.66 million bpd, initially set to expire at the end of 2024, will now last until the end of 2025, while voluntary cuts of 2.2 million bpd will extend until September 2024 and then phase out. This move aims to support oil prices by tightly managing supply during uncertain economic conditions.

Introduction: 

In the vast landscape of technical analysis, patterns emerge as valuable tools for traders seeking to understand market movements and make informed decisions. Among these patterns, the cup and handle pattern stands out as a reliable indicator of potential bullish trends.

Imagine spotting a pattern that not only signals a potential buying opportunity but also provides insight into the psychology of market participants. That's precisely what the cup and handle pattern offers.

In this comprehensive blog, we will delve into the intricacies of the cup and handle pattern: what it is, how to identify it, and most importantly, how one can use it to their advantage in the dynamic world of stock trading.

Valid Pattern and its Relevance:

The Cup with Handle is a popular bullish continuation pattern that traders often use to identify potential buying opportunities. Developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks, this pattern consists of two main parts—the cup and the handle.

The cup forms after a price advance and resembles a bowl or rounding bottom. Once the cup is formed, a trading range develops on the right-hand side, shaping the handle.

In simple terms, imagine a cup followed by a smaller cup-like formation called the handle.

This pattern indicates a consolidation period, and a breakout from the handle's trading range typically signals a continuation of the prior price advance.

Let's delve deeper into this powerful pattern and explore how you can use it to your advantage in the world of trading.

The above example is for educational purposes only. 

The Cup with Handle pattern is a powerful tool for traders, signaling a bullish continuation in a stock's trend. Let's break down this pattern using some key points:

Trend: Before spotting the Cup with Handle pattern, look for an existing trend. Ideally, this trend should be a few months old. If it's too mature (say, more than a year), it means that there could be less potential upside.

Cup: The cup should resemble a "U" shape, like a bowl or rounding bottom. A "V" shape would be too sharp. The perfect pattern would have equal highs on both sides of the cup, but this isn't always the case.

Cup Depth: The depth of the cup ideally retraces 1/3 or less of the previous advance. However, with volatile markets, the retracement could range from 1/3 to 1/2. In extreme situations, it could even be 2/3, in line with Dow Theory.

Handle: After the cup forms, there's a pullback forming the handle. Sometimes it looks like the cloth of the flag or pennant sloping downward. The handle usually doesn't retrace more than 1/3 of the cup's advance.

Duration: The cup can form over one to six months, sometimes longer on weekly charts. The handle typically completed within one to four weeks.

Volume: Volume should decrease as prices decline and remain lower than average in the base of the bowl; it should then increase when the stock begins to make its move higher, back up to test the previous high.

Target: You can estimate the projected advance after the breakout by measuring the distance from the lowest point of the cup till the breakout point (neckline).

By understanding these simple rules, you can identify and trade the Cup with Handle pattern with confidence.

Conclusion:

Mastering the Cup with Handle pattern can significantly enhance your trading strategy. By identifying this bullish continuation pattern, traders can anticipate potential breakouts and capitalize on profitable opportunities. Remember to combine this pattern with other technical analysis tools for confirmation and always manage your risk.

With practice and patience, you'll be able to spot this pattern with ease and incorporate it into your trading routine. Stay disciplined, so that your “cup” can overflow with successful trades but just remember to “handle” your emotions as well.

Stock name: Narayana Hrudayalaya Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

Since its listing, the stock has consistently trended upwards. From November 2023 to May 2024, it stabilized, forming a head and shoulder pattern on the daily chart. On May 28, 2024, the stock broke out from this pattern with above-average trading volume and a negative MACD signal. Currently, the RSI is very low. According to technical analysis, if this momentum continues, the stock may decline further.

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: Aurobindo Pharma Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Weekly

Observation:

The stock has been moving sideways for a long time and formed a cup and handle pattern on its weekly chart. It broke out from this pattern in May 2024, supported by average trading volume and a positive MACD signal. However, the stock is now retesting the breakout level. Currently, the RSI is in a favourable zone. According to technical analysis, if the stock rebounds from the retest, it may move 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:

• Tata Steel's UK operations are expected to achieve an operating profit in H2 FY25, though the year will still end with a reduced loss. CEO T V Narendran noted improved cost efficiency and stable demand, ensuring profitability despite steel price drops. Tata Steel is also restructuring in Europe due to carbon taxes, transitioning 7 million tonnes in the Netherlands over the next decade. The company aims to reduce its net debt to EBITDA ratio below 2.5 by year-end.
  
  
• Oil and Natural Gas Corp (ONGC) will form a joint venture with EverEnviro Resource Management to build 10 compressed biogas (CBG) plants, aiming to reduce CO2 emissions by 7.5 lakh tons annually. This collaboration marks ONGC's transition into renewable energy, including solar, wind, and biofuel projects. ONGC aims to achieve net-zero emissions by 2038 and sees this partnership as a critical step in advancing renewable energy in India.
  
  
• Angel One, India's third-largest stock broker, plans to restructure by creating a holding company for its various business entities. This move aims to allow each entity, including credit, asset management, and wealth management, to operate independently. The restructuring seeks regulatory clearances and new licenses, potentially enhancing focus on lending, wealth management, and insurance. The holding company will remain listed, consolidating group revenues.

Stock name: Sundram Fasteners Ltd.

Pattern: Double bottom pattern and retest

Time frame: Daily

Observation:

The stock has declined since October 2023 but stabilized between February and May 2024, forming a double bottom pattern on its daily chart. A significant breakout occurred on May 15, 2024, supported by above-average trading volume. However, the stock has since retested the breakout level. Currently, the RSI has cooled to a favourable zone. Technical analysis suggests that if the stock rebounds from this retest, it may continue to rise.

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: Divi's Laboratories Ltd.

Pattern: Inverse head and shoulders pattern

Time frame: Weekly

Observation:

Since October 2021, the stock has been declining but formed an inverse head and shoulders pattern on its weekly chart between May 2022 and May 2024. It broke out of this pattern at the end of May 2024, supported by a significant gap-up opening the following week. The RSI level is currently high. Technical analysis indicates that if the stock maintains its momentum, 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.

News for the day:

• United Breweries (UBL), AB-InBev, and Carlsberg have launched the Brewers' Association of India (BAI) with the World Brewing Alliance (WBA). Aiming to drive innovation, moderation, and sustainability, the BAI will address industry growth barriers and promote responsible drinking. Together, these companies control 85% of India's beer market. Vinod Giri will lead BAI from June 1, 2024.
  
  
• State Bank of India (SBI) is selling the personal guarantees provided by Nikhil Gandhi, former promoter of Reliance Naval and Engineering, with a reserve price of ₹3.48 crore. As of May 31, 2024, SBI's outstanding principal dues are ₹1,160 crore, with total dues amounting to ₹3,512 crore. This sale, the largest in the secondary market for personal guarantees, highlights the minimal recovery expected compared to the claim amount. The auction is set for June 25, with expressions of interest due by May 31.
  
  
• Power Mech Projects has secured a Rs 563 crore order from BHEL to construct a nuclear power plant at the Kaiga Atomic Power Project. This marks the company's entry into the nuclear sector. The construction will be focusing on civil, structural, and architectural works for units 5 and 6. PMPL's Chairman, Sajja Kishore Babu, emphasized the project’s role in expanding nuclear power, which the government aims to increase to 22,480 MW by 2031.

Stock name: Birla Corporation Ltd.

Pattern: Head and shoulders pattern and retest

Time frame: Daily

Observation:

The stock experienced an upward trend in 2023 but stabilized from December, forming a head and shoulders pattern on its daily chart. In May 2024, it broke out of this pattern, supported by a bearish MACD indicator. Since the breakout, the stock has been retesting the breakout level and is currently below it, with a low RSI. Technical analysis suggests that if the stock gains downward momentum, it may decline further.

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: RITES Ltd.

Pattern: Double bottom pattern

Time frame: Daily

Observation:

The stock has been in a downward trend since February 2024. Between April and May 2024, it stabilized and formed a double top pattern on its daily chart. On May 18, 2024, the stock broke out from this pattern, supported by a bullish MACD indicator. After the breakout, the stock underwent a significant retest leading to a favourable RSI level. Technical indicators suggest that if the stock rebounds from the retest, it may move upwards.

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:

• One97 Communications, Paytm's parent company, denied any discussions with the Adani Group about acquiring a stake, calling recent media reports speculative and untrue. Both One97 and the Adani Group emphasized compliance with SEBI regulations and dismissed the rumours as baseless.
  
  
• LIC's assets have surpassed Rs 50 lakh crore, nearly double Pakistan's GDP. In FY24, LIC reported a profit of Rs 40,676 crore and total premium income of Rs 4,75,070 crore. With a 59% market share in Indian life insurance, LIC is now eyeing the health insurance sector. Its market value surged by 52% in six months, becoming the seventh-largest stock by market capitalization.
  
  
• Maruti Suzuki has opened its 5,000th service touchpoint in Gurugram, inaugurated by CEO Hisashi Takeuchi. The company plans to double its capacity to 4 million units annually by FY31, expanding its service network across 2,500 cities. Last fiscal year, Maruti Suzuki added 400 service touchpoints and serviced 25 million vehicles.

Stock name: Gujarat State Petronet Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

The stock has been rising since June 2022 but recently stabilized, forming a double top pattern on its daily chart. On April 22, 2024, it experienced a significant gap down opening, breaking out from the pattern with high trading volume and a bearish MACD. Since the breakout, the stock has continued to decline below the breakout line at a slower pace, with its RSI at very low levels. Technical analysis indicates that if this trend persists, the stock may continue to move downward.

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: Pidilite Industries Ltd.

Pattern: Symmetrical triangle pattern and retest

Time frame: Weekly

Observation:

Since 2022, the stock has been trading sideways, forming a symmetrical triangle pattern on its weekly chart from January 2022 to March 2024. In March 2024, the stock broke out of this pattern with above-average trading volume. Following the breakout, a retest helped cool off the overbought RSI, and the stock successfully rebounded. Technical analysis suggests that if the stock maintains its current momentum, it may continue to rise further.

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 Enterprises' board has approved raising Rs 16,600 crore through Qualified Institutional Placement (QIP). This initiative requires approval at the June 24 AGM and from regulators. Previously, Adani Enterprises had approved a Rs 12,500 crore QIP in May 2023, which wasn't executed. Additionally, Adani Energy Solutions also plans to raise Rs 12,500 crore through QIP.
  
  
• LIC is considering entering the health insurance sector and evaluating acquisitions, anticipating new composite insurance licenses. This move aims to boost India's under-penetrated health insurance market. LIC reported a 2% rise in Q4 FY24 net profit to Rs 13,763 crore and annual profits of Rs 40,676 crore, recommending a final dividend of Rs 6 per share.
  
  
• UltraTech Cement has offered to acquire a 31.6% stake in UAE-based RAK Cement Co through its subsidiary, UltraTech Cement Middle East Investments Ltd. This follows an earlier announcement of a $101.10 million investment for a 29.39% stake. The acquisition offer period runs from May 28 to June 24, 2024. RAKWCT, listed on the Abu Dhabi stock exchange, had a Rs 482.5 crore turnover in 2021.

Stock name: Clean Science and Technology Ltd.

Pattern: Double bottom pattern and retest

Time frame: Daily

Observation:

The stock experienced a decline starting in January 2024, which stabilized between March and May, forming a double bottom pattern on the daily chart. It had a significant breakout on May 22, 2024, with substantial trading volume. However, after the breakout, the stock is undergoing a major retest, causing its RSI to drop to around 55. According to technical analysis, if the stock rebounds from this retest, it may continue to rise.

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: Finolex Cables Ltd.

Pattern: Cup and handle pattern

Time frame: Weekly

Observation:

The stock has shown an overall upward trend. From the period January 2018 to May 2024, the stock has formed a cup and handle pattern on its weekly chart. In May 2024, it broke out of this pattern with significant trading volume. This breakout was reinforced by a positive MACD signal recently. According to technical analysis, if the stock sustains this breakout momentum, it may continue its 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.

News for the day:

• Mukesh Ambani's Reliance Industries Ltd (RIL) is entering the African telecom market through its subsidiary Jio Platforms Ltd (JPL). Radisys, owned by JPL, is teaming up with Tech Mahindra and Nokia to partner with Next-Gen Infrastructure Co. (NGIC). NGIC, partly owned by the Ghanaian government, will be Africa's first neutral 5G shared infrastructure provider, starting in Ghana and expanding continent-wide. This marks RIL's entry into the global telecom tech sector.
  
  
• Jaguar Land Rover (JLR) will start assembling the Range Rover and Range Rover Sport in India, reducing prices by 18-22%. This will lower the Range Rover to Rs 2.6 crore from Rs 3.3 crore and the Range Rover Sport to Rs 1.4 crore from Rs 1.8 crore. Assembling locally in Pune, JLR aims to capitalize on India's 15% duty on kits versus over 100% on imports. Tata Sons chairman N Chandrasekaran highlighted this as a sign of confidence in the Indian market.
• IDBI Bank's Stressed Assets Stabilisation Fund (SASF) received 18 expressions of interest from asset reconstruction companies to buy ₹6,151 crore in non-performing loans. SASF aims to recover 11.59%, with a reserve price of ₹713 crore. Notable interested ARCs include Arcil, JC Flowers, and Edelweiss. The auction date will be announced soon.