The market seems to have entered into a consolidation phase after a sharp run-up towards a new high. Hence, the said consolidation is likely to be seen in the coming days with immediate support at 21,900-21,800 on the Nifty 50 and crucial support at the 21,500, whereas on the higher side, 22,200 can act as a hurdle in the near term, experts said.
On January 16, the benchmark indices snapped a five-day winning streak and closed lower after volatile trade. The Nifty 50 fell 65 points to 22,032, and formed a bearish candlestick pattern which resembles the tweezer top kind of pattern on the daily charts. Tweezer top candlestick occurs when the high points of two candlesticks remain the same after an uptrend, which is a bearish reversal pattern.
The BSE Sensex was down 199 points at 73,129, while the Nifty Midcap 100 and Smallcap 100 indices were also under pressure, falling 0.4 percent and 0.5 percent.
Stocks that outperformed the broader markets on Tuesday included Indian Oil Corporation, Steel Authority of India, and Life Insurance Corporation of India. Indian Oil Corporation has been in an uptrend for four days in a row, rising more than 4 perent to Rs 143.6, the highest closing level since October 26, 2017, and formed strong bullish candlestick pattern on the daily charts with robust volumes, while it is trading above all key moving averages (20, 50, 100 and 200-day EMAs - exponential moving averages).
Steel Authority of India has seen nice consolidation breakout and formed strong bullish candlestick pattern on the daily timeframe with healthy volumes. The stock jumped more than 4 percent to Rs 119.55 and also traded above all key moving averages.
Life Insurance Corporation of India gained major strength on Tuesday, rising 4.4 percent to end at record closing high of Rs 892.55 and formed robust bullish candlestick pattern on the daily charts with significantly higher volumes, while trading above all key moving averages. Now it is 26 rupees away from its intraday all-time high of Rs 918.95.
Here's what Omkar Patil of Ashika Group recommends investors should do with these stocks when the market resumes trading today:
Life Insurance Corporation of India
After overcoming its resistance at Rs 760 level, LIC experienced a consolidation phase with minimal volumes. In the recent trading session, the stock successfully broke out of the consolidation pattern with a surge in volumes, indicating a continuation of the previous uptrend. The upmove was supported by averages, confirming the presence of an uptrend.
The stock has the potential to continue moving higher till Rs 960, with support on the downside placed at Rs 850 level.
Following a test of lower levels around Rs 80, SAIL has been on an upward trajectory accompanied by higher trading volumes. The recent upward movement found support from the 12-day EMA (exponential moving average - Rs 116), and the RSI (relative strength index) above the 50 mark reflects positive momentum in the trend.
The stock has the potential to continue moving higher till 130, with support on the downside placed at Rs 115 level.
After finding a support around Rs 85 levels, IOC has been following an ascending channel. The stock recently displayed an upmove with a surge in volumes.
The MACD (moving average convergence divergence) on the daily timeframe demonstrated a positive crossover above the zero-line, indicating a tendency for prices to trend.
The stock has the potential to extend its upward movement till Rs 155 level, while maintaining support at the Rs 138 level on the downside.
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