Big movers on D-Street: What should investors do with Hindalco, ONGC and Asian Paints?

Benchmark indices closed flat in highly volatile trade on Monday as continuous FII selling, disappointing quarterly earnings and weak trends from Asian markets dented investor sentiment.

Stocks that were in focus include names like Hindalco, which rose 0.7%, ONGC, which fell 2.02%, and Asian Paints, whose shares declined nearly 8% on Monday.

Here's what Kushal Gandhi, Technical Analyst, StoxBox, recommends investors should do with these stocks when the market resumes trading today.

Hindalco

The metal index has been exhibiting a sideways trend within a broader trading range over the past six months, currently supported by the upward-sloping 200 Daily Moving Average. The weakness in the metal index is expected to persist, particularly following a breakdown below the 8900 level.

In contrast, a weekly analysis of Hindalco reveals that its price action is potentially forming a volatility contraction pattern, indicating progressive accumulation by savvy investors demonstrating leadership traits compared to their peers.

The stock is currently trading slightly above the 200 Daily MA, around 652, making the zone of 652-620 a crucial demand area. Maintaining a position above this range will be essential to avert further selling pressure.

The RSI on the daily time frame is showing early signs of reversal, suggesting the potential for bullish momentum—a positive development. However, relative strength against the market benchmark remains weak, and buyer demand has waned in recent trading sessions.

We predict a potential upside if the share price can reclaim the critical resistance level near 715, as this would negate the existing negative tertiary trend and confirm a reversal. Until this occurs, we recommend refraining from purchasing HINDALCO shares at the current market price.

ONGC

The Oil and Gas index is currently in stage 4 of its cycle analysis, which marks a period where the factors that previously supported the index’s price during its topping phase are giving way to fatigue and the pressures of anxious sellers. ONGC's share price mirrors the movement of its sector index and is presently on a downward trend.

The shorter-term moving averages are acting as an immediate supply zone, resulting in a lower high and lower low price structure, indicative of ongoing selling pressure. Additionally, the stock is lacking in earnings per share (EPS), price strength, and buyer demand, as well as exhibiting negative momentum, with the RSI on daily and higher time frames displaying a downward slope.

Therefore, we advise against purchasing ONGC in an attempt to bottom fish the stock at its current market price.

Asian Paints

On July 30th, 2024, a bullish breakout suggested a promising beginning to a positive upward trend. However, this rally has since lost momentum due to the emergence of a double-top pattern, signaling a potential trend reversal.

The stock was already experiencing profit-taking, and further declines were driven by major brokerage houses issuing warnings regarding disappointing Q2 results. Currently, the stock trades below both its 200-day and weekly moving averages, with extremely weak earnings per share (EPS) and price strength, as well as very limited buyer demand—factors that suggest strong bearish indicators.

Therefore, we advise against purchasing this declining stock at its current market price.

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