As equity markets have been in corrective mode post the record highs in September, several stocks have entered an oversold territory on the daily scale. The Nifty 50 has declined close to 5 per cent from its all-time of 26,277. The Nifty RSI hit a low of 36.7 and since then has recovered to 45 levels.
Technically, the Relative Strength Indicator (RSI) – a key momentum oscillator helps in determining if a particular stock or index is in an oversold or overbought zone. The RSI is plotted on a 0 – 100 scale, with a reading below 30 considered as oversold, whereas, a reading above 70 is considered overbought.
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Meanwhile, here are 5 stocks that at present are seen trading in oversold zone. Vodafone Idea, Dabur India, Bank of India, Avenue Supermarts (DMart) and Yes Bank. Should you consider buying these oversold shares or should you avoid them? Here’s what the technical charts suggest:
Dabur India
Current Price: Rs 572
Upside Potential: 7.5%
Support: Rs 562
Resistance: Rs 585; Rs 595
Similarly, on the weekly scale, the 20-WMA (Weekly Moving Average) at Rs 562 has been providing able support for the Dabur stock. Hence, charts suggest that as long as the stock is able to hold above these key support levels, the stock may attempt an interim pullback.
As such the stock can bounce back to Rs 615 levels, with interim resistance clearly visible at Rs 585 and Rs 595 levels.
Vodafone Idea (Voda Idea)
Current Price: Rs 9
Possible Pullback: 24.4%
Support: Rs 8
Resistance: Rs 9.80; Rs 10.50
The 14-day RSI of Voda Idea stock has been in oversold zone for nearly a month now. However, among the other key momentum oscillators the MACD (Moving Average Convergence-Divergence) has given a positive divergence today. Hence, the stock may attempt a pullback in the near-term.
Bank of India (BoI)
Current Price: Rs 104.50
Possible Pullback: 14.8%
Support: Rs 101.80
Resistance: Rs 109; Rs 112
The weekly chart shows presence of its 100-WMA support at Rs 101.80 levels – a key moving average the stock has not violated in nearly 2 years. As long as this support is held, the stock can attempt a bounce back to Rs 120 levels. Interim resistance for the Bank of India stock is seen at Rs 109 and Rs 112 levels.
DMart
Current Price: Rs 4,198
Upside Potential: 7.9%
Support: Rs 4,055; Rs 3,940
Resistance: Rs 4,300
The weekly chart shows presence of key support around Rs 4,055 levels – its 100-WMA; below which next major support stands at Rs 3,940. In case of a pullback the stock may attempt to bounce back towards its 200-DMA, which now stands at Rs 4,530. Immediate resistance for the stock is seen at Rs 4,300 levels.
YES Bank
Current Price: Rs 21
Upside Potential: 12.9%
Support: Rs 20.30
Resistance: Rs 22
YES Bank stock is seen trading close to its 100-WMA – which stands at Rs 20.30 – a key moving average the stock has held since July 2022. On the daily scale the stock has been drifting lower ever since it broke below its 20-DMA (Daily Moving Average) in early August. The 14-day RSI for the stock now stands around 25 levels.
First Published: Oct 15 2024 | 1:36 PM IST
