[ad_1]
As the broader markets continue their positive momentum on the second day of the week, investors’ buying interest remains strong. One counter that should be kept on the radar is HDFC Life Insurance Company Limited (NS:). It is an insurance firm with a market capitalization of INR 1,34,371 crore and trades at a TTM P/E ratio of 94.39.
The stock was falling continually since mid-July 2023 without any relief rally. Investors kept selling the bounces every time the stock tried to recover and the cumulative price action of lower lows and lower highs translated into the formation of a downward-sloping channel on the daily chart.
Image Description: Daily chart of HDFC Life Insurance Company with volume bars at the bottom
Image Source: Investing.com
This is a classic downtrend pattern that encapsulates the peaks and troughs within two almost parallel southward-facing trendlines. The price keeps bouncing off from the resistance (upper trendline) and support (downward trendline) as it progresses toward the south.
A break below or above this pattern should be carefully watched to gauge the future price direction., While a break below the support denotes that the downtrend could accelerate from thereon, a rally above the resistance depicts a probable trend reversal, which is exactly what happened with the share price of HDFC Life Insurance Company.
The stock jumped 4% to INR 650, by 11:10 AM IST and comfortably broke above the resistance of the channel, which is gearing it up for a continued up move. The nearest level which can be there on the screen once the rally continues in the next few sessions, is INR 668.
If the stock falls back below the channel boundaries then that could mean a probable failure of the breakout. Therefore, a stop loss can be placed below INR 637. However, a stop loss below INR 620 would be more practical which can give sufficient room to the stock to retrace and then rally back.
Read More: This Lender Clocks 13% NIMs, Want to Loan Money to it?
In case you want to connect with me, reach out on Twitter. My handle is – aayushxkhanna
[ad_2]
Source link
