The market failed to hold above 18,400 on the Nifty50 and reversed all its previous day's gains to close sharply lower on May 16 amid selling pressure in auto, select banking and financial services, metal, FMCG and pharma stocks.
The benchmark indices snapped two-day gains on Tuesday with the BSE Sensex ending down 413 points to 61,932 and the Nifty50 falling 112 points to 18,287 and formed a bearish belt hold as well as a bearish engulfing kind of pattern on the daily scale, indicating the sign of a bearish reversal.
Bank Nifty failed to continue its uptrend and lost nearly 170 points to 43,904, while the broader markets had a mixed trend with the Nifty Midcap 100 index rising 0.26 percent and Smallcap 100 index down 0.02 percent.
Stocks that outperformed the broader markets as well the benchmark indices included Engineers India, which gained 3.5 percent to close at Rs 100.30, the highest closing level since January 23, 2020 and formed a bullish candlestick pattern with long upper and lower shadows indicating volatility in the counter. The trading volume was higher than the average volume.
PNC Infratech has also seen bullish candle with upper and lower shadows on the daily scale as it rose 2.6 percent to Rs 319 on the NSE. It has seen a breakout of consolidation range, as well as, downward sloping resistance trendline adjoining highs of February 3 and May 8 this year.
Finolex Industries recorded a breakout of horizontal resistance trendline adjoining multiple touch points, and formed a bullish candlestick pattern on the daily timeframe, with above average volumes. The stock rose 3.6 percent to Rs 187.7, the highest closing levels since January 3 this year.
Here's what Rohan Shah of Stoxbox recommends investors should do with these stocks when the market resumes trading today:
In early May 2023, stock staged a breakout from wide inverse Head & Shoulder price pattern which is bullish signal for medium term trend. The breakout has accompanied with surge in volumes and big bullish candle adds further confirmation and increases the reliability of the breakout.
Hence, we believe, any dip towards Rs 95-93 zone shall be utilized as fresh buying opportunity with a potential upside towards Rs 109 and Rs 125 levels in short to medium term time frame.
The pattern analysis on the weekly chart shows that price action corrected as means of profit taking bout amidst the broader market correction. The correction was arrested at the support of 61.8 percent retracement level after a healthy upside of 321 percent.
The price action is trading within a potential Cup and Handle schematic and the pattern itself is the sign of trend continuation. The pattern bullish breakout comes on the weekly closing basis above Rs 185 following which the price is anticipated to showcase strength for a potential upside of 14 percent from the CMP to the levels of Rs 216, while key support is expected at Rs 175.
The price action on the daily time frame of PNC Infratech shows that it has reclaimed its polarity resistance at Rs 305 which now offers cushion to limit the draw-downs. The price action has formed a high tight base over a relatively elongated base. This also suggests that the stock is witnessing modest accumulation and has been garnering bullish strength before a potential upside rally.
Tuesday's move shows that it attempted at breaking above the defined lateral range which is a positive sign. We anticipate the stock surge of 10 percent to Rs 352, on the flip side, Rs 302 is the key support level to watch out for.
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