Bearish Risk-Reward Outlook: Angel One Picks Lemon Tree, Two Other Stocks

Angel One Highlights Lemon Tree and Two Other Stocks Amid Bearish Sentiment

Despite a recent rally in the Nifty index, Angel One’s technical analyst Hitesh Rathi identifies a bearish risk-reward outlook for investors, recommending three stocks including Lemon Tree.

Nifty’s Recent Performance

The Nifty index experienced a significant rally last week, gaining nearly 1,000 points from its lows. This surge was driven by strong buying interest, particularly in the IT sector, which rose by approximately 11.5%. The index’s closing at 23,146 reflects a recovery in market sentiment, with buyers defending key support levels around 23,100-23,200. However, the rally’s concentration in a few sectors raises concerns about sustainability.

Despite the positive momentum, the Nifty faces immediate resistance in the 23,250-23,300 range, compounded by a 50-day exponential moving average (EMA) and a 45-degree trendline. Broader market indices, such as the MIDCAP and SMALLCAP, have not participated in this rally, indicating a potential lack of strength in the upward movement. This narrow market leadership could limit further gains, making the risk-reward setup less favorable for bullish investors.

Stock Recommendations from Angel One

In light of the current market conditions, Angel One’s Hitesh Rathi has identified three stocks with bullish potential, despite the overall bearish sentiment. Here’s a closer look at these recommendations:

1. Lemon Tree (LEMONTREE)

Lemon Tree Hotels has shown resilience, finding support in the 102-100 range, which is considered a critical support cluster. The formation of a bullish anchor column and a double-top buy signal on the Daily Point & Figure charts indicate strong buying interest. The bullish crossover of the 20-day exponential moving average (DEMA) over the 50-day DEMA further supports this positive outlook.

**Recommendation:** Buy LEMONTREE around 113.5-113, with a stop-loss at 103.5 and a target of 125-128.

2. Supreme Industries (SUPREMEIND)

Supreme Industries has established a robust support zone between 3,290 and 3,200, attracting consistent buying. The bullish anchor column formation and a turtle breakout on the 0.25% Daily Point & Figure chart suggest a shift in momentum towards buyers.

**Recommendation:** Buy SUPREMEIND around 3,595-3,590, with a stop-loss at 3,370 and a target of 3,870-3,880.

3. Indian Hotels (INDHOTEL)

Indian Hotels has recently broken out of a downward trendline, indicating a potential trend reversal. The consolidation breakout and a multi-brick breakout on the 1% Renko chart suggest that the previous uptrend is resuming.

**Recommendation:** Buy INDHOTEL around 772-770, with a stop-loss at 704 and a target of 880-885.

Key Highlights

• Nifty closed at 23,146, up 2.78% for the week.
• IT sector led the rally with an 11.5% increase.
• Immediate resistance for Nifty is in the 23,250-23,300 range.
• Lemon Tree, Supreme Industries, and Indian Hotels are recommended stocks.
• Broader market indices remain subdued, raising caution.

Investor Note: Investors should approach the market with caution, focusing on the recommended stocks while being mindful of the prevailing bearish sentiment and resistance levels in the Nifty index.