Despite Friday's rebound and finally closing above 19,000, the week ended with a cut of around 2.5 percent against the previous week's close. While the rebound may seem encouraging, at present it appears to be the 'Dead Cat Bounce', as the indicators were in deep oversold conditions and the challenges in the market are far from over.
The recent vertical decline over the past couple of weeks, starting from around 19,800, presents a formidable challenge for the bulls camp to make a comeback due to substantial overhead resistance. In this context, the range of 19,200 to 19,250 is a formidable resistance zone, that is a breakdown level from a major swing low.
In addition, the RSI (relative strength index) smoothened indicator has dipped into the oversold zone below 30 levels for the first time since March, hence, in the near term dip towards this week’s low around 19,850-19,800 may continue to act as a cushion, while a critical support zone is observed around 18,600, represented by the long-term 200 SMA (simple moving average).
Staying vigilant regarding geopolitical factors is essential, as they have the potential to exert a significant influence on market trends.
Here are two buy calls for short term:
IndiaMART InterMESH: Buy | LTP: Rs 2,771.50 | Stop-Loss: Rs 2,690 | Target: Rs 2,890 | Return: 4 percent
The stock prices have been in a continuous declining mode for the last one and half months. In the process, it shed nearly 20 percent from its recent highs and has sneaked slightly below the ‘200-SMA’.
On Friday, the oversold condition resulted in a sharp rebound after the announcement of its quarterly numbers. With this development, we can see stock reclaiming its ‘200-SMA’ with a spike in volumes.
In addition, the ‘RSI-Smoothened’ on the daily chart has confirmed a positive crossover. Considering this, we expect the recovery to extend in the current week as well. We recommend buying for a trading target of Rs 2,890. The stop-loss can be placed at Rs 2,690.
Ramco Cements: Buy | LTP: Rs 972.65 | Stop-Loss: Rs 918 | Target: Rs 1,140 | Return: 17 percent
This stock seems to be immune from the recent destruction that the broader market experienced in general. It remained sideways in a slender range all this while. Taking a glance at the weekly and monthly timeframe charts, we can see this stock trading in a strong up trend.
The ongoing consolidation is merely a part of this time-wise correction phase. The moment overall sentiment improves, this stock will start to perform well.
Taking all these evidences in mind, traders can look to buy on a decline towards Rs 960 – 950 for a near-term target of Rs 1,140. The strict stop-loss needs to be placed at Rs 918.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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