As long as the Nifty 50 stays below the record high of 21,593, consolidation is likely to continue in the coming sessions with key support at the psychological 21,000 mark, followed by critical support at 20,800, experts said, adding that if the index surpasses and holds its record high, then further sharp rally can't be ruled out, experts said.
On December 21, the Nifty 50 jumped 105 points to 21,255, and the BSE Sensex climbed 359 points to 70,865, while the broader markets also rebounded, with the Nifty Midcap 100 index rising 1.7 percent and Smallcap 100 index gaining 1.9 percent on strong breadth.
Stocks that performed better than the broader markets included Hindustan Copper, Cyient, and Dixon Technologies. Hindustan Copper has formed Bullish Engulfing kind of candlestick pattern on the daily charts, indicating the possibility of positive mood in the counter going ahead. The stock rallied nearly 11 percent to Rs 217.90, the highest closing level since November 2012, with robust volumes.
Cyient, after recent consolidation, recorded 5.5 percent gains to end at record closing high of Rs 2,323 on the NSE, with above average volumes. The stock has formed long bullish candlestick pattern, which resembles Bullish Engulfing candlestick pattern on the daily scale, and traded above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving average), which is a positive sign.
Dixon Technologies has also formed Bullish Engulfing candlestick pattern after last seven days of consolidation. The stock jumped 4 percent to end at record closing high Rs 6,522 and traded well above key moving averages.
A Bullish Engulfing pattern is also known as a reversal pattern, which is generally formed after the downtrend. In this pattern, the green candle completely covers the previous red candle.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
On December 21, the stock opened on a flat note and gradually surpassed yesterday’s high with strong volume activity. Despite volatile market conditions, the stock maintained its strong momentum throughout the day.
On the short-term time frame stock has formed strong price volume breakout pattern. The texture of the pattern suggest breakout action will continue in the near term if stock succeeds to trade above Rs 208 levels.
For the swing traders, Rs 208 should be the sacrosanct level, trading above the same we can expect uptrend continuation wave up to Rs 235.
On the weekly scale, the counter is into a rising channel chart formation with higher high and higher low series pattern. The technical indicators like ADX (average directional index) is also indicating further up trend from current levels, which could boost the bullish momentum in coming horizon.
As long as the stock is trading above Rs 2,250 the uptrend formation is likely to continue. Above which, the counter could move up to Rs 2,520. On the flip side, fresh sell off possible only after dismissal of Rs 2,250.
After the strong upward rally, the stock went into the consolidation mode on the daily scale. The recent breakout in the stock is representing a bullish continuation pattern, which is signifying a new leg of up move from the current levels.
For positional traders, Rs 6,280 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 6,970. However, if it closes below Rs 6,280 traders may prefer to exit out from trading long positions.
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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