A Technical Look at Reliance Industries, Bajaj Finance and IDFC First Bank

Today I will look at two big stocks that have been in the news for the past few days. The stocks are Reliance Industries (NS:) and Bajaj Finance (NS:). Additionally, I have attached my pre-market YouTube video for today. In it, I have looked at the and as usual. Moreover, I have also looked at IDFC (NS:) First Bank Ltd (NS:) as the equity released excellent results over the weekend.

The first stock is Reliance Industries. I had covered Reliance Industries in my 20th July pre-market video as the government the night before had announced that they were canceling the windfall tax. Thus, I covered it, as Reliance was one of the key beneficiaries of this move. In my analysis, I stated that Reliance Industries had a strong resistance level at Rs. 2,540 and I did not believe the stock could close above it. My analysis was spot on as the stock had a gap up which took it from Rs. 2,438 to a high of Rs. 2,542, after which it closed at Rs. 2,503. Thus, the high reached 2 points above my resistance level at Rs. 2,540, after which the rise ended. Post that trading session, the stock had a sharp fall, as it simply could not break the resistance zone.

However, the price action of Reliance industries seems to have changed in the past two sessions. This is as on Friday the equity closed at Rs. 2,509. Thus, in the coming sessions, I expect Reliance Industries to once again try to break my resistance level at Rs. 2,540. However, I still do not expect it to be successful. I say this as the stock last time post rejection formed a box range, with Rs. 2,540 being the top. Thus, it will find it rather tough to break that zone. Nevertheless, if it breaks the zone, then the next resistance is at Rs. 2,600. On the trading front, once it reaches Rs. 2,540, I will start selling certain CE strikes.

The second equity is Bajaj Finance. The past week has been excellent for the equity as it had a strong breakout post its results. In fact, the results were so well received that some fundamental nut jobs started calling the index participant a prospective top-end player.

Now in the coming week, I expect the hopes and dreams of the rose-eyed Bajaj Finance traders to get rattled. I say this as the stock is very close to a strong quant resistance level that is between Rs. 7,340 and Rs. 7,500. Thus, I expect this resistance zone to stop the rise as the equity will have a tough time breaking above it. This is as there is a confluence of resistance zones within earshot. For example, right above my quant resistance zone, we have a simple candle resistance zone at Rs. 7,600. Hence, in my opinion, a mix of all these factors will cause the equity to have a pullback. If that were to occur, then the supports on the downside to watch are at Rs. 6,850 and Rs. 6,300.

Overall, the stocks mentioned above are approaching a crucial resistance zone. That, coupled with the headline indexes being over-extended, suggests to me that you ought to get ready for some bumpiness. Lastly, watch my pre-market video attached below if you are interested in understanding how I expect IDFC First Bank to perform in the coming sessions. This is as I have warned traders to avoid buying the stock as of now.

Good luck trading.

Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgment before making investment decisions. The report provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.