[Premium] Infrastructure Deep Dive

We'll start by saying this. Given the breakout in Larsen & Toubro and improving price action in the Nifty Infrastructure Index we expected to see a lot more individual stocks we'd want to be buying, but that wasn't the case. The reward/risk just isn't there for a lot of them, so we expanded our search to include Nifty 500 stocks in the Cement & Cement Products, Chemicals, Construction, Energy, Fertilisers & Pesticides, Industrial Manufacturing, Paper, Metals, and Textiles industries.

Here's what we found.

The two categories these setups fall into are base breakouts to new highs and breakouts marking a trend reversal. Regardless of which category the setup falls into, the reward/risk is elevated and our risk is well-defined.

In this choppy environment where follow-through is an issue, that's all we care about. Risk management.

Here's Deepak Nitrite pulling back toward its breakout area. While we expect some chop around this level as the 200-day catches up, if prices can stabilize above 300, we can be long with an initial target of 355.

Click on chart to enlarge view.

Shree Cement is also extended after breaking out, but if prices can stabilize above 20,500, we can be long with a target up near 25,100.

Ultratech Cement is consolidating above 4,600 as the 200-day catches up and momentum works off its bearish divergence. With that said, as long as prices are above 4,600 we can be long with a target near 5,440.

KEI Industries Ltd. pulling back to 470. Given the flat 200-day, a failed breakout looks likely. With that said, after some backing and filling we'd be buying an eventual breakout back above 472, with a target near 610.

Gujarat Fluorochemicals is making new all-time highs. As long as prices are above 1,070, we can be long with a target near 1,485.

SRF Ltd. is flagging tightly below our 2,935 target. We want to be buying a breakout above that level, with a target of 3,870.

Hindustan Petroleum Corporation is in the midsts of a long-term trend reversal, shifting from a stock we want to be selling on strength into one we want to be buying on weakness. As long as prices are above 289, we can be long with a target of 367.

National Fertilizer is emerging from its base and beginning an uptrend. As long as prices are above 36.50, we can be long with a 49.50 target.

Last but not least is Timken India Ltd., which is back above support near 645. As long as prices are above that level, we can be long with a target back at its all-time highs of 1,000.

While there may be some chop in these stocks in the near-term, these charts ultimately look constructive and headed for higher prices over the intermediate/long-term. With that said, if they break through our risk management levels we'll get out, reassess, and re-enter if the stock sets up again.

The tape remains mixed at best, but these are some of the most attractive long setups we're seeing right now.

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

Allstarcharts Team