The market was caught in a bear trap on September 28 after a spike in oil prices raised inflation worries. The benchmark indices fell nearly 1 percent on the monthly F&O expiry day, hence the bearish sentiment might take the Nifty50 towards 19,200 if it decisively breaks the 19,500 mark in the coming session, while the 19,600-19,700 may act as a near-term resistance area for the index, experts said.
The Nifty50 dropped 193 points to 19,523 and formed a bearish engulfing pattern on the daily charts, the bearish reversal pattern, while the BSE Sensex tanked 610 points to 65,508.
Among sectors, the Bank Nifty declined 287 points to 44,301, while the Nifty IT index slipped 715 points to 31,880 and formed a long, bearish candlestick pattern on the daily charts, breaking the 21-day EMA (exponential moving average placed at 32,337).
Stocks that bucked the trend in the falling market included Larsen & Toubro, Oil India, and Data Patterns India. Larsen & Toubro ended at record closing high of Rs 3,010, up 1.52 percent after seeing a decisive breakout of downward sloping resistance trendline adjoining highs of September 12, and September 27. The stock has formed bullish candlestick pattern with long upper shadow on the daily charts, indicating profit booking at higher levels.
Oil India extended its upward journey for yet another session, rising 1.65 percent to Rs 292 and formed a bullish candlestick pattern with long upper shadow on the daily timeframe, indicating selling pressure on the higher side. The stock failed to sustain above the Rs 300 mark, but the trading volume was robust.
Data Patterns India continued to consolidate since the mid of September and formed a Doji candlestick pattern on the daily scale, but tested 50-day EMA (Rs 2,113) and went closer to falling resistance trendline during the day. The stock rose 0.85 percent to Rs 2,099 on the NSE.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
The stock has given a breakout of its Ascending Triangle chart pattern with a strong bullish candlestick. Additionally, on the daily charts, it has formed a higher bottom formation, hence the structure of the stock indicates the beginning of a fresh up trend from the current levels.
Unless it is trading below Rs 280, positional traders can retain an optimistic stance and look for a target of Rs 315.
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 2,920 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 3,240. However, if it closes below Rs 2,920, traders may prefer to exit from trading long positions.
After sharp decline from the higher levels, the counter is in the accumulation zone where it is trading in a rectangle formation. Additionally, it is currently into an oversold territory and available near to its demand area.
The texture of the chart formation and technical indicator RSI (relative strength index) is indicating the reversal formation, which could lead to a new leg of the uptrend from its demand zone.
In the near term, Rs 2,015 would be the immediate support zone for the counter. Above the same, the upward rally might continue towards Rs 2,250.
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