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By Brijesh Bhatia
The January Futures and Options (F&O) expiry ended on a sour note, with the benchmark indices suffering a decline of nearly 500 points, or about 2%. This downturn marked a six-month low, with heightened fear on Dalal Street, particularly as mid-cap stocks faced severe selling pressure.
With the Union Budget set to be announced on 1st February 2025, there is a prevailing expectation that market volatility will spike in the coming days.
Note: The market is open on 1st February 2025
However, amid this backdrop of pessimism, there are always pockets of opportunity. Despite the broader market slump, three stocks are emerging as potential breakout candidates, poised to shine in the longer term.
SRF has captured the attention of many market participants, particularly because of a remarkable long-term chart pattern.
SRF weekly chart
Source: TradePoint, Definedge Securities
On the weekly chart, the stock has broken out of a horizontal channel that lasted for an impressive 179 weeks, marking a multi-year consolidation phase. This breakout is particularly exciting due to the Fibonacci Time Cycle, as the stock broke out in the 179th week, which is closely related to the Fibonacci number of 178.60.
Interestingly, SRF achieved its highest-ever closing on 30th January 2025, and the stock is now poised to break its previous all-time high of ₹2,865. If the stock pushes through this resistance level, it could trigger a stellar rally, outperforming the benchmark indices and potentially rewarding investors with significant returns.
Zensar Technologies is another stock showing strong bullish potential. On the weekly chart, Zensar has recently hit a new all-time high, continuing its impressive run.
Source: TradePoint, Definedge Securities
What stands out here is the volume action – the stock witnessed its highest weekly volumes since December 2023, indicating strong investor interest and confidence in the stock. Volume is often seen as a confirming indicator of price movements, and in this case, the surge in volume adds conviction to the bullish thesis.
Given the rally in the stock and increasing investor interest, it wouldn’t be surprising if Zensar continues climbing into the four-digit territory, potentially becoming a significant outperformer in the near future.
Bajaj Finance has also emerged as a strong candidate for a breakout, similar to SRF. The stock is on the verge of breaking out of the 179-week Fibonacci Time Cycle, which has historically been a strong predictor of price movement.
Source: TradePoint, Definedge Securities
The stock had previously hit an all-time high of ₹8,250 but pulled back slightly below the ₹8,000 level. The key technical level to watch now is a weekly closing price above ₹8,100, which would confirm a breakout and potentially set the stage for further upside.
Bajaj Finance has consistently performed over the years, driven by strong business fundamentals and growth in its lending and financial services portfolio.
The risk
While the broader market faces significant uncertainty, particularly with the Union Budget looming, some stocks stand out due to their strong technical setups and potential for breakout. SRF, Zensar Technologies, and Bajaj Finance all demonstrate patterns suggesting they could potentially outperform the broader index and generate attractive returns.
Disclaimer:
Note: We have relied on data from throughout this article. Only in cases where the data was unavailable have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Brijesh Bhatia has over 18 years of experience in India’s financial markets as a trader and technical analyst. He has worked with the likes of UTI, Asit C Mehta, and Edelweiss Securities. Presently he is an analyst at Definedge.
Disclosure: The writer and his dependents do not hold the Stocks discussed in this article. However, clients of Definedge may or may not own these securities. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The articles’ content and data interpretation are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
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