Market on a high! Top 10 stocks that are on the verge of breakout

NEW DELHI: The 100-point rally in the previous trading session pushed the Nifty50 index above its 200-DMA placed around 7,860. The broadbased rally pushed many individual stocks higher and closer to a breakout.

The technical spike, which we saw in the market, is here to stay and most market experts are pencilling in a level beyond 8,000 at expiry. The momentum might peter out, but the action in individual stocks is likely to continue.

ETMarkets.com collated a list of 10 stocks which are on the verge of breakout:

Analyst: Jimeet Modi, CEO, SAMCO securities.

Biocon: Buy | Target price Rs 600; Stop loss Rs 545| Time: medium term

The stock is breaking a 20-month-long consolidation pattern. It was underperforming all other pharma stocks and, therefore, the untapped potential remains to be exploited. Traders can initiate long positions for a target of Rs 600 plus in the near term and keep a strict stop loss at Rs 545.

Yes Bank: Buy| Target price Rs 1,000; Stop loss Rs 870| Time - medium term

The stock is the fastest mover amongst the private sector banks with higher relative strength. The spree of higher tops and bottoms is still intact. Traders can initiate buy call with a target of Rs 1,000 in the near term and keep a strict stop at Rs 870.

HDFC Bank: Buy | Stop loss Rs 1,090, Target Rs 1,200| Time - medium term

The stock is on the verge of a break out after making the triple top. When the stock comes back for the fourth time, the break out is for real and very powerful to propel the stock to new highs. Traders can buy the stock in the cash market keep a strict stop loss at Rs 1,090 with a target price of Rs 1,200.

Shree Cement: Buy above Rs 13,300| Stop loss 4% below purchase price| Time - medium term

The stock plays a first mover advantage in the cement sector. The stock is on the verge of breakout on the back of the higher top, higher bottom sequence. However, one should buy above Rs 13,300 for high probability trade with a stop at 4% below the purchase price.

Kotak Mahindra Bank: Buy| Minimum target Rs 851| Stop loss Rs 703| Time - medium term

The stock was resilient during the general market decline and therefore possesses a higher relative strength. The stock is passing through a long phase of consolidation and is ready for the upwards rally.

Traders can buy the stock above Rs 740 for high probability trade with a stop at 5% of the buying price. A target of 15 per cent upside can be expected from the breakout levels (assuming traders bought the stock at Rs 740).

Analyst: Birendrakumar Singh, AVP - Technical Research at Systematix Shares & Stocks.

Ashok Leyland: Buy| Target Rs 121-146; Stop loss Rs89| Time period 12 to 15 months

Ashok Leyland has been in long term uptrend from Rs11 (September 2013). The up move broke the long term parallel channel trend line. The long term parallel trend line is drawn joining the lows of Rs 6.15 (December 2008 low) and Rs 11.75 (August 2013 low) and the parallel trend line is drawn from Rs 40.95 (October 2011 high).

In August 2015, the stock broke the upper parallel trend line and then consolidated for 7 months. Last month (March 2016) the stock gave a breakout of the 7-month consolidation signalling a fresh positive up move.

M&M: Buy | Stop loss Rs 1,180; Target price Rs1,440-1,763| Time period 12 months

M&M has formed a broad range between Rs 1,092 and 1,442 levels. The rangebound movement is under formation for past 20 months. Recently, the stock gave a strong pullback from its base support level.

Comparatively, the pullback covered the largest price area in shortest the time period. The stock is likely to touch the upper level of the range i.e. Rs 1,442. On the breakout of the upper level of the range i.e. Rs 1, 442, the stock would move up to Rs 1,783.

Infosys: Buy | Stop loss Rs 1,040; target price Rs 1,494| Time 12 months

Infosys for the past 13 months has been trading in a wide range. The range is between Rs 932 and Rs 1,219 and is just below the breakout level of its long term "Triangle" pattern.

The stock is on the verge of the breakout of its long-term consolidation. On the breakout and close above Rs 1,219 ( on monthly chart) trend would be bullish up to Rs 1,494. Strong support is placed at Rs 1,150-1,040. Buy on dips at Rs 1,200.

Britannia Industries: Buy| Stop loss Rs 2,700; Target Rs 3,018-3,182; Time period 4 to 5 months

Britannia Industries corrected from Rs 3,328 to Rs 2,505. The downtrend is channelled marked within the Red channel trend lines. Thereafter, the stock moved sideways in a range between Rs 2,914 to Rs 2,505.

This sideways range has led to the formation of a ‘triangle’ pattern marked within the blue trend lines. The stock is on the verge of a breakout of the ‘triangle’ pattern and the channel resistance trend line. On a decisive move above Rs 2,887, the trend would turn bullish and would indicate a change in trend to positive.​

Arvind Mills: Buy | Stop Loss Rs 270; Target price Rs 309| Time period 3 months

Arvind Mills pulled back from its low of Rs 235 and broke the channel resistance trend line. Thereafter, the stock moved sideways between Rs 282 and Rs 263. Following the sideways trend, the stock gave a second breakout on Tuesday.

The entire movement from Rs 259 till date has led to the formation of an "Inverse Head and Shoulder" pattern. The volume formation is in sync with the said pattern. The breakout of the pattern is accompanied with the increase in volume.

Tuesday's up move indicates a positive breakout of the "Inverse Head and Shoulder" pattern. This indicates a target of Rs 309. Buy at CMP of Rs 284 with a stop loss Rs 270 on a closing basis for a target price of Rs 309. Trading period 3 months.

(Views and recommendations given in this section are the analysts' own and do not represent those of EconomicTimes.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)