Key Takeaways
- Multiple NSE stocks are consolidating after breaking long‑term falling trendlines, a classic bullish setup.
- Technical indicators (DMI, ADX, MACD) confirm strong buying pressure across Bajaj Auto, Tata Elxsi, and Balkrishna Industries.
- Sector‑wide short covering is evident in consumer staples (Colgate) and IT (HCL), suggesting upside bias.
- Entry zones, targets, and stop‑losses are mapped for each stock to manage risk.
- Historical pullback patterns in these names have historically preceded 12‑18% rally phases.
Most traders overlook the subtle pullback after a breakout—those who act now could capture the next leg of the rally.
Why Bajaj Auto's Pullback Aligns With a Broader Two‑Wheeler Upswing
Bajaj Auto has retreated to the Rs 9,400–9,450 corridor after a decisive breakout above its long‑term falling trendline. The Directional Movement Index (DMI) shows the +DI comfortably above the –DI, while the Average Directional Index (ADX) sits above 20, signalling a strengthening trend rather than a waning one. The MACD remains in positive territory, reinforcing momentum.
Two‑wheeler demand in India is on an upward trajectory, buoyed by a younger demographic and favorable financing terms. Competitors such as TVS Motor and Hero MotoCorp are also posting incremental sales gains, but Bajaj's higher average selling price gives it a margin edge. Historically, a pullback after a breakout in this sector has preceded a 10‑15% rally, as seen in the 2021‑22 cycle when the stock surged from Rs 7,800 to Rs 9,300 within four months.
For traders, a long entry between Rs 9,400 and Rs 9,450 targets Rs 10,200, with a stop‑loss at Rs 9,000. The risk‑to‑reward ratio exceeds 2.5:1, fitting a disciplined short‑term play.
Balkrishna Industries: Bullish Crossover Signals Mid‑Term Trend Reversal
Balkrishna Industries’ chart shows a bullish crossover of the 9‑day and 26‑day Double Exponential Moving Averages (DEMA), a reliable short‑term momentum cue. The stock also broke above its falling trendline, confirming a medium‑term trend shift. The DMI bullish crossover and MACD above zero further validate buying pressure.
Within the off‑highway tyre segment, peers such as MRF and Apollo Tyres are contending with raw material cost volatility. Balkrishna’s recent capacity expansion and export‑focused order book give it a defensive advantage. Historically, similar technical setups in 2018 led to a 13% price appreciation over six weeks.
Suggested entry zone: Rs 2,410–2,400; target Rs 2,600; stop‑loss Rs 2,300.
Tata Elxsi: Accumulation Near Breakout Zone Signals Institutional Interest
Tata Elxsi has successfully retested its breakout zone, with volume swelling near the Rs 5,500 level—an indicator of accumulation by smart money. MACD above zero, DMI bullish dominance, and ADX above 25 illustrate a trend gaining strength.
The digital‑design services segment is expanding as enterprises accelerate cloud migration. Competitor Hexaware and Mphasis are also posting double‑digit top‑line growth, but Tata Elxsi’s higher‑margin design contracts provide a cushion against margin compression.
Historical precedent: In early 2020, a similar breakout led to a 17% rally over eight weeks. Entry between Rs 5,600 and Rs 5,500 targets Rs 6,250, with a stop‑loss at Rs 5,200.
Colgate Palmolive India: Short Covering Fuels a Potential Breakout
Colgate Palmolive India shattered a falling trendline while open interest fell, indicating that short sellers are exiting positions. The stock had previously slipped nearly 50% from its all‑time high, creating a massive call‑option base at the Rs 2,200 strike. The divergence on daily and weekly charts points to a higher probability of sustained upside.
Consumer staples are traditionally defensive, and Colgate’s strong brand equity in a price‑sensitive market provides resilience. Peers such as Hindustan Unilever and Dabur are also seeing short‑covering, but Colgate’s tighter distribution network in rural India gives it a relative edge.
Buy futures in the Rs 2,170–2,190 range; targets Rs 2,250 and Rs 2,300; stop‑loss Rs 2,120.
Mankind Pharma: Short‑Side Dominance Warns of Continued Downtrend
Mankind Pharma’s price action shows lower tops and lower bottoms, while open interest is rising—a classic sign of short‑side accumulation. The stock is trading well below the heavy call‑option base at Rs 2,200, and the “maximum pain” point aligns there, suggesting that until the price breaches this level, bearish pressure will dominate.
The pharma sector is currently navigating regulatory scrutiny, and peers like Sun Pharma and Lupin are also experiencing heightened short interest. Historically, a break above the max‑pain strike in similar scenarios has sparked a rapid 8‑12% bounce.
Recommended sell range: Rs 2,120–2,140; targets Rs 2,060 and Rs 2,020; stop‑loss Rs 2,180.
HCL Technologies: IT Giant Rides Short Covering Into New Highs
Following a strong Q3 earnings beat, HCL Tech’s price climbed while open interest fell, indicating short covering. The broader large‑cap IT space still carries substantial short positions, but HCL is outpacing peers such as Wipro and Infosys in order‑book growth, especially in cloud and cybersecurity services.
Technical signals—higher tops and bottoms, MACD climbing, and a decisive break above the Rs 1,720 call‑base—suggest a move toward Rs 1,800.
Buy futures in the Rs 1,700–1,720 band; targets Rs 1,760 and Rs 1,800; stop‑loss Rs 1,645.
Sector‑Level Trends: Why the Current Breadth Favors Bears Yet Offers Selective Bull Opportunities
The NSE breadth on Jan 19 showed 2,190 decliners versus 728 advancers, a typical bear‑heavy environment. However, technical analysis reveals that many laggards are merely consolidating after breaking long‑term downtrends. In sectors such as autos, IT, and consumer staples, the DMI+DI dominance and ADX readings above 20 signal that the underlying momentum remains bullish despite surface‑level weakness.
Historically, market consolidations of 4‑6 weeks often precede a 5‑10% index bounce, especially when a critical number of stocks exhibit breakout‑plus‑pullback patterns. Investors who isolate these high‑probability setups can capture outsized returns while the broader market lags.
Investor Playbook: Bull vs. Bear Cases for the Highlighted Stocks
Bull Case: The convergence of breakout confirmations, bullish DMI/ADX readings, and supportive macro trends (e.g., rising consumer demand, IT spending) creates a multi‑layered catalyst. Entering at the specified zones with tight stops offers a favorable risk‑reward profile.
Bear Case: A sudden macro shock—such as a policy shift, geopolitical tension, or unexpected earnings miss—could reignite short‑side pressure across the breadth. In that scenario, the pullbacks could deepen, and stop‑losses would be triggered.
Risk management tip: Keep position sizes modest (no more than 2% of portfolio per trade) and adjust stops to stay above key moving averages (e.g., 12‑day DEMA) to avoid premature exits.