The market is experiencing significant volatility on Thursday due to uncertainties and nervousness surrounding the Budget. Nifty has formed piercing candles on two consecutive days reflecting the indecisiveness. A clearer picture of the market’s future trend should emerge once the budget-related uncertainties settle.

However, three stocks have formed a strong setup on the technical charts presenting an appealing risk-to-reward ratio. They can be considered for swing trading with a holding period of four to six weeks.

Analyst: Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy

Gujarat Gas Limited – Horizontal Resistance Breakout

Gujarat Gas made a high of 786 in August 2021 before correcting by about 50 percent. But the stock has been witnessing action on the upside for the last three months.

The stock consolidated in a narrow range of 540 to 560 for a brief period and has finally broken this range with a good volume. The daily RSI for the stock is 78 so it may see some consolidation for a while.

On the derivative front, huge writing was seen on the put side and buying on the call side. Max Pain for the stock stands at 560 indicating a limited downside for the stock.Thus it is recommended to buy Gujarat Gas for a target price of 625 keeping the stop loss at 548.

HDFC AMC – Trend Continuation

HDFC AMC has been in a great trend since April last year and the stock has more than doubled since then. The level of 3380 was a major resistance for the stock. After breaking this level the stock consolidated for a while.

HDFC AMC has now broken this range in continuation of the larger trend. The daily RSI for the stock is 68 indicating the stock is in good momentum and has a good upside potential.

An option chain analysis suggests call buying and put writing in the stock. The max pain stands at 3500 showing conviction of the traders on the upside.

HDFC AMC can touch the all-time high from here and thus it can be bought for a target price of 3845 keeping a stop loss at 3460 on a closing basis.

Colgate Palmolive – Narrow range Breakout

Colgate Palmolive has been in a great bull run and the stock has moved 48 percent in the past seven months. The stock consolidated in a narrow range of 2400 to 2550 for about one month.

The stock broke out of this narrow range on Wednesday with good volume. The daily RSI for the stock stands at 61 indicating the stock has the potential to give a quick move from here.

On the derivative front, huge put writing and call buying are seen. Because of this, the Put to Call Ratio stands at 0.37 depicting bullishness in the stock.

Thus, it is recommended to buy Colpal for a target price of 2750. The stop loss should be placed at 2445 on a closing basis.

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

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