Indian market lost some steam after both Sensex and Nifty reclaimed crucial psychological levels on April monthly expiry. The Sensex failed to hold on to 50,000 while the Nifty50 closed below 15000 on Thursday.
Sectorally, buying was seen in metals, energy, oil & gas, and healthcare stocks, while profit-booking was seen in auto, telecom, consumer discretionary, and capital goods.
Stocks that were in focus include JSW Steel which closed with gains of nearly 10 percent, SAIL that rose over 8 percent, and Tata Steel which touched a fresh 52-week high on Thursday.
Here's what Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities Ltd, recommends investors should do with these stocks when the market resumes trading today:
JSW Steel: Stock in an overbought zone
On April 29, the stock made yet another all-time high of Rs 728.90. In April alone, the stock has rallied over 65 percent. The important point is that the stock not only surpassed its previous 52-week high of Rs 644 but comfortably sustained above the same.
The sharp surge in the price action surprised most of the traders. On the daily as well as on the weekly charts, the stock has formed a breakout continuation pattern which is grossly positive for JSW Steel Ltd.
However, intraday charts and momentum indicators indicate that the stock is in an overbought zone and there are high chances of a quick short-term price correction which is not ruled out if it trades below Rs 675.
For the next few trading sessions, Rs 675 should be the trend decider level for the bulls. If the stock sustains above the same, we can expect a continuation of the uptrend up to Rs 750-775. On the flip side, the uptrend would be vulnerable if the stock closed below Rs 675.
SAIL: Uptrend to continue
The stock has rallied over 20 percent this week. Post strong uptrend rally from Rs 70 to 98 it was consolidating in the range of Rs 98 to 85.
On the weekly charts, the stock has formed a strong bullish candle along with strong modest volume activity which clearly suggests that the uptrend is likely to continue in the short run.
Further, on the daily charts, the stock has formed a higher bottom series pattern which also supports a medium-term uptrend.
For the positional traders, Rs 99.50 should be the key level to watch. If the stock manages to trade above the same then we can expect an uptrend continuation wave up to Rs 125.
Tata Steel: Upside likely to continue
In April, the stock has rallied over 40 percent. On April 29, Tata Steel Ltd made a fresh all-time high of Rs 1036.95 and after an extremely strong intraday session, the stock managed to close above the psychological of Rs 1000 which is broadly positive.
The important thing is the price volume activity. The modest volume activity post-breakout clearly indicates high chances of a further uptrend from current levels.
On the daily and weekly charts, the stock has formed a strong promising price volume uptrend continuation formation.
For the trend following traders, Rs 980 and 960 would be the key levels to watch, the overall chart structure suggests if the stock sustains above the same, breakout continuation texture is likely to continue up to Rs 1075-1100.