Breakout Stocks: Why Aurobindo Pharma and Godrej Consumer look attractive on charts?

A breakout is a phase where stock price moves outside a consolidation with increased volumes. Such breakouts generally lead to good price movement in the short term and this is one of the proven methods for selecting the best share to trade for the short term.

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In this column, we spoke to Ruchit Jain, Lead - Research, 5paisa.com, where he handpicks breakout stocks that can be considered as best short-term stocks.

We covered the stocks that have given a breakout from the resistance or stocks that have broken their important support levels.

The shares that gave a breakout above their resistance with good volumes should be referred for bullish trades, while stocks that break their supports should be referred for bearish trades.

The stocks given are for reference and traders are advised to take their own decision and trade with proper money management.

We have picked two stocks that have given a breakout (or breakdown) from a consolidation phase as per technical analysis for a period of 1 week:

Godrej Consumer Products: Buy range 950-940| LTP Rs 958| Target Rs 992| Stop Loss Rs 926| Upside 4%

The stock has seen a price-wise correction since mid-September and has now formed a support base in the range of 870-880.

In the last couple of sessions, prices have pulled higher sharply and have given a breakout from falling trendline resistance.

The ‘RSI’ oscillator too has moved above its recent range indicating a pick-up in momentum and hence, we expect the stock to give good returns in the short term.

Traders can look to trade with a positive bias and buy in the range of 950-940 for a potential target of around Rs 992. One can place a stop loss below Rs 926 on long positions.

Aurobindo Pharma: Buy Range 718| LTP: Rs 717| Target Rs 740-758| Stop Loss Rs 695| Upside 6%

The Nifty Pharma index has formed a good support base in the range of 13000-13200 and is now witnessing an up move. We believe that the corrective phase is over for this sector and stocks from this space could give good returns in the short term.

Within the pharma stocks, Aurobindo Pharma is positively placed as the stock has recently formed a ‘Higher Top Higher Bottom’ structure and has now given a breakout from its immediate resistance.  

The recent consolidation also has led to the formation of an ‘Inverted Head and Shoulders’ pattern and prices have given a close above the neckline of the pattern.

The ‘RSI’ oscillator too has moved above its recent range, which indicates a pick-up in momentum, and hence, we expect the stock to deliver good returns in the short term.

Traders can look to trade with a positive bias and buy around the current price of Rs 718 for potential targets of Rs 740 and Rs 758. One can place a stop loss below Rs 695 on long positions.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)