Trading in Rakesh Jhunjhunwala Stocks II Technical’s decoded by Bonanza Portfolio

Rakesh Jhunjhunwala holds 4 cr shares or 1.3% stake in Tata Motors and owns 4.75% or 64 lk shares of Escorts in his portfolio. Vishal Wagh, Research Head, Bonanza Portfolio highlights technical analysis for traders and investors, so that they can understand the levels of these two stocks. Tata Motors share price today is Rs 326.5, up Rs 1.4 or 0.4%. Escorts share price today is Rs 1334, up Rs 15.5 or 1.2%.

Vishal said that Tata Motors managed to multiply itself more than five times since the panic bottom of March 2020. The same nature of the automaker has observed in the year 2008 bottom also. Till 2010 it has given ten-bagger returns to the investors. The 'V shape' recovery is a prominent pattern both times. The news of increasing exposure to the electronic vehicle is attracting investors recently. Currently weekly and monthly charts are showing the higher high higher low formation, which is also an indication of the strength in the stock. RSI on a monthly and weekly basis is already in the overbought zone and it may remain there till the time strength continues in the counter.

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On the other hand, he said that the daily chart is showing some consolidation in the stock and resistance near 340 levels. The support is near to 300 levels at 20 EMA. The Rs 300 level has worked as resistance in Jan 2020 and the year 2017 too. So, he is observing a line on polarity near Rs 300 zones. Till the time stock is sustaining above Rs 300 the strength may continue and demand may push it well above Rs Rs 340 levels. Todays' strong move has already covered the losses of the last couple of days and stock is ready to retest and eventually break above Rs 340 levels. Above Rs 340 it is ready for Rs 394 – Rs 442 levels.

Vishal says that Escorts have gained momentum later part of 2019 from Rs 400 levels. It managed to hold above Rs 400 in Covid-19 fall and now the stock has already more than three baggers from the bottom. Thanks to the agriculture-focused budget for 2020. As per the Elliott counts on the weekly chart, Escorts has completed its major 3rd wave upside and the correction on the fourth wave is in progress. Within this correction, it may test Rs 1250 - Rs 1100 levels. The area of Rs 1223 is 23.80% retracement of the whole rally from the bottom of 2019.

He said that Escorts is currently moving between a broader range of Rs 1200 – Rs 1450. Any big move in this counter is expected on breaks of this range. The said range is around 250 points or 17% on the mean of the range. So, on the break of the said range one can see a big move in this counter. This may give targets of Rs 1700 on the higher side and Rs 950 on the lower side.  On a weekly basis, it has created an 'Evening star' pattern and the follow-up selling in the running week has confirmed that top is seen near to 1450 levels for the stock for a very short term basis. Till the time the trader can trade in this counter near to upper and lower levels of the said range with small stop loss.