The market seems to be gaining strength to step out of the consolidation phase ahead of the RBI policy meeting outcome scheduled on February 8 and facing strong resistance at the upper band of big downside gap generated on January 17 (at 21,970). Hence, if the index manages to close above the same in the coming sessions, then new record high can't be ruled out, with immediate support at 21,750 area, experts said.
On January 7, the benchmark indices wiped out gains in late morning deals and remained consolidative in the later part of the session. The Nifty 50 was up 1.1 points at 21,930.5 and formed a bearish candlestick pattern with lower shadow on the daily timeframe, while the BSE Sensex fell 34 points to 72,152.
The broader markets stayed strong for yet another session with the Nifty Midcap 100 and Smallcap 100 indices rising more than seven-tenth of a percent each.
Stocks that recorded better performance than the broader markets included Delta Corp, Can Fin Homes, and Indian Hotels. Delta Corp rebounded sharply and recovered losses of last several weeks in a single session, rising 11 percent to Rs 151.6 and formed long bullish candlestick pattern on the daily charts with robust volumes. The stock traded above all key moving averages barring the 200-day EMA (exponential moving average).
Can Fin Homes has seen a breakout of horizontal resistance trendline at Rs 843 level and closed at Rs 851, up 4 percent with strong volumes. The stock has formed healthy bullish candlestick pattern on the daily timeframe and traded above all key moving averages.
Indian Hotels has been in a strong uptrend, reporting higher highs, higher lows formation since October last year. The stock climbed 3.7 percent to Rs 525 and formed strong bullish candlestick pattern on the daily charts with above average volumes, and traded well above all key moving averages, which is a positive sign.
Here's what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today
Since the last 6 months or so, the counter has been consolidating in the range of Rs 700–800. Recently, it gave a clean breakout from the said range and is currently placed near Rs 850 mark.
On the indicator front, the weekly Alligator is supporting price action, along with stochastics, which has reversed from 50 levels. This further affirms the bullish stance on the counter. Thus, one can buy in the range of Rs 835-855 with an upside target of Rs 910 and a stop-loss of Rs 911 on a daily close basis.
In the previous trading session, the said counter bounced back sharply after respecting the support of Rs 125–130 for a few weeks. It has also violated the 8-month-old bear trendline with massive volume.
On the indicator front, Stochastic has reversed from the oversold zone after making an impulsive rebound, which further adds more confirmation for bulls. One can buy in the zone of Rs 145–155 for upside target of Rs 185 and stop-loss would be placed near Rs 133 on a daily close basis.
Indian Hotels had a fabulous bull run till now. Due to this bull run, it has been extremely overbought, which makes it vulnerable for quick correction. So one should avoid adding longs at this juncture and wait for meaning correction. For those who are already running in profit, they can book in the zone of Rs 530–540.
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