With the solid start to the February series, the Nifty 50 has cleared its both hurdles (21,500 and 21,700) in a single day, after forming a temporary bottom at the 21,137 level. Hence, if the index manages to hold the momentum, 21,850-22,000 is the area to watch out for on the higher side, which can give the confirmation to the start of a higher-high-higher-low formation, whereas on the other side, 21,600-21,500 is expected to be the near-term support area for the index, experts said.
On January 29, the BSE Sensex rallied 1,241 points or 1.8 percent to 71,942, while the Nifty 50 surged 385 points or 1.8 percent to 21,738 and formed a long bullish candlestick pattern on the daily charts. The Nifty Midcap 100 and Smallcap 100 indices gained 1.6 percent and 1.5 percent.
Stocks that smartly outperformed the broader markets as well as benchmarks included Reliance Industries, Power Finance Corporation (PFC), and MCX India. Index heavyweight Reliance Industries has seen a decisive breakout of downward sloping resistance trendline adjoining highs of January 16 and January 20, and clocked 7 percent rally to end at record closing high of Rs 2,896. The stock has formed robust bullish candlestick pattern on the daily scale with significantly higher volumes.
PFC has also seen a consolidation breakout and rose 6.6 percent to end at new closing high of Rs 446.75. The stock has formed long bullish candlestick pattern on the daily timeframe with strong volumes. Further, the stock traded above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving average).
MCX India, too, saw a breakout of horizontal resistance trendline adjoining highs of December 8, and December 20, 2023 and formed long bullish candlestick pattern on the daily timeframe, with above average volumes. The stock jumped 6 percent to Rs 3,415 and traded well above all key moving averages.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
It is rare to see this stock rally by more than 7 percent in single day. Reliance Industries surpassed its previous record highs of Rs 2,792 level and achieved fresh record highs of Rs 2,905 level which keeps the tone positive for the stock.
Parabolic Sar dots has started to form below the price which is also suggesting that short term bias is bullish. Stochastic RSI (relative strength index) is also confirming the bullish bias as it has given bullish crossover. Stock has shown sharp upside move, buy on dips seems to be a prudent strategy.
In short, Reliance is bullish. Buy on dips can be used to ride the trend as far as price hold Rs 2,790 on the downside for further upside levels of Rs 3,000.
On the below chart, we can see that stock has given breakout of the rectangular pattern, indicating up move post accumulation. In the previous session, price has closed above Rs 432 with increase in volume. This confirms breakout of the trading range.
Along with this, MACD (moving average convergence divergence) has also shown a bullish crossover which is acting as a double confirmation.
In short, trend for PFC looks positive. Use dips towards Rs 432 as a buying opportunity with the target of Rs 465 as long as Rs 410 holds on the downside.
MCX price gave breakout from consolidation technical pattern which keeps the tone positive. Bollinger Bands expansion suggest that momentum is likely to continue on upside in next few trading sessions.
MACD has confirmed the positive bias with a bullish crossover, aligning with the breakout. The overall trend looks bullish as far as price hold Rs 3,240 on the downside.
In short, MCX is bullish. Dips can be used as buying opportunity for the targets of Rs 3,550 as far as price is holding Rs 3,300 on the downside.
Follow Ashish Kyal on Twitter - @kyalashish
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