[Premium] India Long Setups

Before we get into the trade ideas, I want to outline a few points that we should keep in mind as we approach these individual stocks.

First off, we've still not seen a lower low in the major indexes accompanied by improving breadth and momentum, which we are looking for to indicate a tradeable bottom is in.

Additionally, many of these are mean reversion setups, meaning that they are lower probability by nature. When you combine this with the lack of confirmation from the major indexes signals that these trades may take an attempt or two before they work, if at all. As we saw with PTC India and Hindustan Construction, we can't be afraid to stop out and get back in. Keep that in mind when sizing positions for these types of trades.

The third thing worth mentioning is that while we're ultimately in an environment where we want to be selling strength, not buying weakness, there aren't many opportunities on the short side right now where the reward/risk is skewed in our favor. Because of that, we want to be taking advantage of what the market is giving us as we await better short entries in many of the weakest areas of the market.

Last but not least, I'd say that the trades outlined here and in our previous posts are not necessarily the names that I think are going to rally the most, but instead are those where our risk is well-defined and the reward/risk is still very much skewed in our favor. It's easy to get distracted by moves that are happening without us, but we have to stick with our process and not be upset by missing moves in names we have no business being involved in.

With that said, let's get into the trade ideas.

One sector that's showing a bullish momentum divergence at support is the Financial Services Index. As long as prices are above 10,400, this slight failed breakdown is intact and targets the January highs near 11,350.

The Nifty Media Index is also confirming a bullish momentum divergence and failed breakdown below 2,495, which targets a move toward 2,845 if we're above that level.

Asian Paints Ltd. is a long if it's above 1,215, with an upside target of 1,460.

Atul Ltd. is a long if we're above 2,980, with an upside target of 3,615.

Bata India Ltd. has pulled back toward support in recent weeks. If prices are above 895 we can be long with an upside target of 1,205.

If BEML Ltd. is above 540, we can be long for a trade toward 740.

Can Fin Homes Ltd. put in a slight failed breakdown below its lows from late September as momentum diverged. If prices are above 223 we can be long for a trade toward 320.

Dabur India Ltd. is pulling back toward support at 388 as momentum stays out of oversold territory. Ideally we'd wait for a move back above 454.50 to get long again, but if you'd prefer to buy this pullback you can own it against 388 for a move back toward 454.50.

Dewan Housing Finance Corporation put in a failed breakdown below support at 261 as momentum diverged. If prices are above that level we can be long with an initial upside target of 351.

We want to be buying Future Consumer Ltd. if prices are above 41.90, with an upside target toward 55.

If The Federal Bank Ltd. can get above 74.50, we can see a move up toward the downward sloping 200-day moving average at 90.

If Havells India Ltd. is above 551.50, we can be long with a target of 714.50.

If Interglobe Aviation Ltd. can get above 812, we want to be long with a target of 1,080.

Jindal Saw Ltd. is a long if prices are above 70, with a target near 100.

We want to buy a breakout above 55.90 in Jindal Stainless, with an upside target near 80.

We want to be buying this pullback toward 344.50 in JSW Steel Ltd., with an upside target of 464.

Merck Ltd. continues to trend well. We want to be buying any weakness toward 2,560, with an upside target near 3,830.

Page Industries Ltd. is attempting to hold support at 28,600. If prices are above that level and momentum stays out of oversold territory, we can be long with an upside target of 40,260.

If Rain Industries Ltd. is above 163.90, then we want to be long with an upside target of 247.50.

We want to be buying a breakout above 12.10 in Reliance Communications Ltd. and taking profits near 17.50.

If RattanIndia Power Ltd. is above 3.06, we can be long with an upside target near 4.30.

If Syndicate Bank is above 31.15, we can be long with a target near 37.20.

If TV18 Broadcast Ltd. is above 33.08, we can be long for some mean reversion toward 44.50.

Last but not least is Vinati Organics, which we can be long if prices are above 1,155, with an upside target of 1,645.

These are the opportunities we're seeing right now, but if you have any other setups that you'd like us to review, you know how to reach us. We'll add to this list if/when the market provides trades skewed in our favor.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team