The market was caught in a bear trap on July 21, with the benchmark indices falling over 1 percent amid selling pressure in technology stocks due to weak full-year guidance by Infosys. FMCG stocks, and index heavyweight Reliance Industries also dragged the market down.
The BSE Sensex tanked 888 points to 66,684, and the Nifty50 plunged 234 points to 19,745, but the market breadth was not very weak as three shares declined for every two advancing shares on the NSE.
The broader markets had a mixed trend with the Nifty Midcap 100 index fell 0.4 percent and Smallcap 100 index gained 0.7 percent.
Bank Nifty was under pressure but performed better than benchmarks, firmly holding 46,000 mark throughout session on Friday. The index declined 112 points to 46,075.
The Nifty IT was the main disappointing factor for the day, correcting nearly 1,300 points to 29,871.
Stocks that bucked the trend included Engineers India, Tanla Platforms, and Zomato. Engineers India shares rallied over 4 percent to Rs 135, the highest closing level since September 17, 2018. The stock has formed bullish candlestick pattern on the daily charts with above average volumes and traded well above 20, 50 and 200-day EMAs (exponential moving average), which is a positive sign.
Tanla Platforms has seen a nice breakout of consolidation range on Friday, rising more than 13 percent to Rs 1,266, the highest closing level since June 10 last year. The stock has formed strong bullish candlestick pattern on the daily charts, with significantly higher volumes.
Zomato has taken a support at 20-day EMA (Rs 77.15) and climbed 3.5 percent to Rs 80.3. The stock has formed long bullish candlestick pattern on the daily charts with above average volumes.
Here's what Foram Chheda of ChartAnalytics recommends investors should do with these stocks when the market resumes trading today:
After hitting a Double Bottom around Rs 70 levels in March, with additional support from the 200-day MA (moving average), the stock price of Engineers India has shown a sharp upward movement. The stock has consistently formed higher tops and higher bottoms, indicating an ongoing upward trend.
Notably, trading volume has substantially increased over the past 2-3 months, further validating the bullish sentiment.
The RSI (relative strength index), a lead indicator, is also aligned with the price, staying neutral and showing no negative divergence.
Given these positive factors, it is recommended to continue holding the stock with a potential target of Rs 145 and a trailing stop-loss at Rs 127.70.
In June, the stock price of Tanla Platforms experienced a strong breakout from a sideways channel at Rs 814 levels. This breakout was accompanied by the stock forming higher tops and higher bottoms, confirming an upward trend.
The surge in trading volume further supported the bullish sentiment. Given these positive indications, it is advisable to hold onto the stock, with a potential target of approximately Rs 1,400-1,410 levels.
However, it's important to be vigilant, as any price movement below Rs 1,015 could be a signal to consider exiting the stock position.
For the past year, the stock price of Zomato remained in a consolidation phase. However, a notable development has taken place recently as the stock price is now attempting to break out from horizontal trendline resistance. This potential upswing could be triggered if there is a weekly closing above Rs 81 levels.
Furthermore, the stock has been consistently trading above key moving averages, including the 50-day, 100-day, and 200-day MA, which suggests a bullish trend.
The increase in trading volume also supports this positive momentum. Given these factors, it might be worth considering buying the stock at its current levels, setting a stop-loss at Rs 75.70, and targeting Rs 90.50.
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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