D-Street Week Ahead: Nifty extends rebound; Godfrey Phillips signals breakout after base formation

After a day of breather, the markets resumed their rebound and extended their move while ending the day on a positive note. The Nifty opened higher and gradually kept building on the opening gains through the day. No major selling pressure was seen and the markets maintained their gains throughout the session. The headline Index closed with a net gain of 275.50 points (+1.16%).

This cigarette manufacturer has shown a major base formation over the past several weeks. As indicated by the technical parameters, the stock is set to move higher from its current levels, leading to a potential trend reversal in the stock.

After staying in a corrective downtrend for a few months, GODFREYPHLP formed a base for itself in January this year. This base formation happened when the RSI formed a bullish divergence against the price. Over the past week, the stock has traded sideways while staying disconnected with the market moves on the either side.The daily MACD has turned positive over the past few days; it is now bullish and above its signal line. The expanding Histogram indicates accelerating momentum on the upside. The RSI has formed a new 14-period high, which is bullish.

The relative strength is showing a major trend shift. After flattening out, the RS line has started to move higher and has crossed above its 50-period MA. The stock has rolled inside the leading quadrant of the RRG; this will ensure relative outperformance of the stock over the coming days.The OBV has formed a new high ahead of the price breakout. This bullish divergence indicates strong accumulation in the stock while it formed a base.An expected move in GODFREYPHLP can take it higher to Rs. 2,300. A close below Rs. 2,030 would negate the current technical setup.Milan Vaishnav CMT, MSTA, is a Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae, and is based in Vadodara. He can be reached at [email protected]