We had yet another positive session for the market on August 7, as the Nifty50 sustained above the 19,300-19,500 levels, which is a critical support area for the index. On the higher side, 19,600-19,700 is likely to be key zone for further sharp upside, experts said.
The Nifty50 gained 80 points to 19,597, and formed a bullish candlestick pattern with minor upper and lower shadows which resemble the spinning top kind of a pattern on the daily charts, which is a trend reversal pattern.
The BSE Sensex climbed over 230 points to 65,953, while the Nifty Midcap 100 and Smallcap 100 indices gained 0.5 percent and 0.2 percent.
The Bank Nifty dropped 42 points to 44,837 after rangebound session, while Nifty IT sustained upward journey, rising 343 points to 30,779 and formed yet another bullish candlestick pattern on the daily timeframe.
Stocks that were in action included Mahindra & Mahindra, Poly Medicure, and Finolex Cables. Mahindra & Mahindra has seen decisive breakout of Mother candle and formed bullish candlestick pattern on the daily scale, which is a positive sign. The stock closed above 20-day EMA (exponential moving average), rising over 4 percent to Rs 1,527, with strong volumes.
Poly Medicure has seen strong downward sloping resistance trendline breakout and formed robust bullish candlestick pattern on the daily charts with strong volumes. The stock jumped 14.5 percent to end at record closing high of Rs 1,455.35.
Finolex Cables shares climbed nearly 7 percent to Rs 1,075 and formed long bullish candlestick pattern on the daily charts, with above average volumes. The stock traded well abvoe 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:
M&M rallied following strong quarterly results and also broking houses upgraded their target levels on the stock. The stock is moving up by following simple Elliott wave theory. Wherein, currently primary wave 3 is ongoing on the upside which is considered as a strongest. Auto sector has been outperforming over past few months in a secular uptrend.
Along with this, Ichimoku Cloud is acting as a strong support and recently as well prices bounced back from this support levels. As per this, nearest support for M&M is near Rs 1,395 levels for a move towards Rs 1,700 levels which is the channel resistance.
Finolex Cables prices are moving well within an upward sloping channel. We can see that after reversing from the lower end of the channel, stock witnessed a good rally. Moving average crossover system is working well and as long as prices stay above both 20-day and 50-day MA (moving average) the trend remains positive.
From risk reward perspective, it is better to use dips opportunity to enter into this stock with support at Rs 975 for a move to Rs 1,130.
In the previous session, Polymed formed a huge Bullish candle. The stock has closed above Rs 1,315 level which confirms breakout of the rounding bottom pattern. After retesting the neckline stock has bounced back on the upside which is deemed to be a positive sign.
Also, wave 4 got completed near Rs 650 levels and since then stock has rallied by more than 129 percent. Currently prices are moving up in form of wave 5.
KST (know sure thing) has turned above signal line and also trading above zero line suggesting that further good momentum is likely to continue.
In nutshell, one can use dips as a buying opportunity to ride the trend with targets of Rs 1,550 as long as Rs 1,295 holds on the downside.
Follow Ashish Kyal on Twitter - @kyalashish
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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