Brooks Laboratories and Deepa Jewellers Recommended as Stocks to Watch

Indian equity markets faced downward pressure recently due to a combination of factors including the Reserve Bank of India's notably hawkish monetary stance, ongoing foreign institutional investor (FII) sell-offs, rising government bond yields, and a weakening rupee. These elements collectively dampened investor sentiment and exerted stress particularly on rate-sensitive sectors, which have seen their near-term valuations adjust sharply.

Despite the challenging environment, technical analysts have spotted potential opportunities in two specific stocks: Brooks Laboratories and Deepa Jewellers. Both companies have displayed strong technical breakouts accompanied by increased trading volumes, indicating possible gains over the medium term.

Brooks Laboratories recently broke out decisively from a previously declining channel pattern on the hourly chart. The stock moved above the critical 20, 50, 100, and 200 exponential moving averages (EMAs), supported by expanding volume and a Relative Strength Index (RSI) that crossed bullish signal lines into a strong momentum zone. Senior Technical Research Analyst Virat Jagad from Bonanza highlighted that this upward momentum suggests a target price near 90, with a recommended buy range around 70.5 to 71 and a stop loss at 60 to manage risk.

Similarly, Deepa Jewellers has cleared a horizontal resistance level between 220 and 222 on its daily chart, pushing its price to approximately 232.80. This breakout came with robust volume expansion and an RSI that turned sharply upward, signaling sustained bullish momentum. Jagad advises buying Deepa Jewellers within the 232 to 234 price band, setting a stop loss at 222 with a target of 250. This setup points to a strong potential upside in the weeks ahead.

The broader market context is significant here. The RBI's recent policy moves have tightened liquidity conditions, which typically lead to higher interest rates and can affect sectors sensitive to borrowing costs. Additionally, the continuous outflow of foreign funds has placed downward pressure on Indian stocks, while the rupee's depreciation adds to the challenges faced by companies with foreign currency exposure.

Looking forward, the upcoming quarterly earnings season will be crucial for investors. Corporate management teams' commentary on how demand is holding up and their ability to absorb or pass on rising input costs will provide important clues about the sustainability of recovery in various sectors.

This period of volatility and adjustment in the Indian markets underscores the importance of technical analysis for identifying stocks with favorable risk-reward profiles. Both Brooks Laboratories and Deepa Jewellers have demonstrated chart patterns and volume dynamics that suggest they could outperform in the medium term despite prevailing headwinds.

Investors should note that the recommendations provided come with specific entry points, stop losses, and target prices to help manage risk. As always, it is advisable to consider these insights alongside individual investment goals and perform due diligence before making decisions.

Disclosure: The article was authored by Podishetti Akash, who is not a SEBI-registered Research Analyst or Investment Adviser. Neither the author nor his relatives hold financial interests in the companies discussed as of the article's publication date. The views expressed are those of the original SEBI-registered analysts and are reproduced with proper attribution. Readers should consult the original research reports and make independent investment choices.