The market almost negated the lower highs, lower lows formation and looked ready for a rally towards 21,850-21,900 area as it has taken a support at 10-day as well as 21-day EMAs in the last couple of sessions despite volatility.
If that comes true, then the Nifty 50 may enter the big downside gap created on January 17 and further if it manages to bridge it, then a record high can't be ruled out, as long as it holds 21,500 as a support, experts said.
On February 1, the budget day, the Nifty 50 fell 28 points to 21,698 amid consolidation and the BSE Sensex lost 107 points to 71,645, while the market breadth was slightly in favour of declines. On the broader markets front, the Nifty Midcap 100 index was down six-tenth of a percent and Smallcap 100 index gained 0.6 percent, while the India VIX fell 10 percent after the FOMC meet outcome and interim budget, which may support the bulls.
Stocks that outperformed the benchmarks and the broader markets included Canara Bank, Eicher Motors and BEML. Canara Bank rallied 4 percent to hit multi-year high of Rs 501.5 and formed long bullish candlestick pattern on the daily timeframe with healthy volumes. The stock continued to trade above all key moving averages (21, 50, 100 and 200-day EMA - exponential moving averages), which is a positive sign.
Eicher Motors sustained its upward journey since the start of this week and the volumes were also on the higher side, especially after taking a good support at 200-day EMA in the past week. Now the stock traded above all key moving averages and rallied 2.4 percent to Rs 3,933.
BEML jumped 8.5 percent to end at record closing high of Rs 3,805 and formed long bullish candlestick pattern on the daily timeframe with above average volumes, while the stock traded well above all key moving averages. Further it has been in higher highs, higher lows formation since after October lows.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
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.
For the traders, Rs 485 would be the key support level to watch out. Above which the uptrend structure should continue until Rs 540.
After the remarkable up move of the last few weeks, the stock witnessed short-term correction from the higher levels. However, the counter has reversed its trend from its important retracement zone.
The technical formation suggests a revival of the uptrend from the current levels. As long as the counter is trading above Rs 3,780, the bullish formation is likely to continue. Above which, the counter could move up to Rs 4,200.
After the robust rally on the weekly scale, the stock went into the consolidation mode. However, the recent breakout in the stock is representing a bullish continuation pattern signifying a new leg of up move from the current levels.
For positional traders, Rs 3,710 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 4,120. However, if it closes below Rs 3,710 traders may prefer to exit 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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