A sharp selling pressure continued for the third straight session on Thursday as bears maintained control over Dalal Street on January 20 as all sectors, barring metals, corrected amid quarterly earnings and consistent FII selling.
The BSE Sensex fell more than 600 points to close below 59,500 levels, and the Nifty50 plunged more than 180 points to 17,757, while the broader markets outperformed benchmark indices with the Nifty Midcap 100 and Smallcap 100 indices falling 0.16 percent and 0.05 percent.
Stocks that were in focus include Cholamandalam Investment and Finance Company which was the biggest gainer in the futures and options segment, rising 6.05 points to Rs 649.15, and Bharat Dynamics which hit a fresh record high of Rs 473.40, before closing 5.89 percent higher at Rs 461.15. Minda Corporation touched a fresh 52-week high of Rs 214, before closing with 4.53 percent gains at Rs 207.5.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
Cholamandalam Investment and Finance
After a medium-term price correction, the stock took the support near Rs 470 and reversed quickly. After a sharp reversal formation, it is comfortably trading above 200, 50 and 20-day SMA (simple moving average) which is broadly positive.
On the daily and weekly charts, the stock has formed promising higher bottom series formation which support further uptrend from current levels.
We are of the view that as long as it's trading above Rs 600, the uptrend formation will persist. Above the same, it could rally up to Rs 680-720. However, below Rs 600 the uptrend would be vulnerable.
The stock has rallied over 6 percent on January 20. The stock opened with a strong note and quickly clear the resistance of Rs 450 with strong volume activity. Despite weak market conditions, Bharat Dynamics maintained its strong momentum throughout the day.
On the short term time frame, the stock has formed a strong price volume breakout pattern. The texture of the pattern suggests that breakout action will continue in the near term if stock succeeds to trade above Rs 440 level.
For the swing traders Rs 440 would be the sacrosanct level, and trading above the same, we can expect uptrend continuation wave up to Rs 500.
On January 20, the stock made a fresh 52–week high of Rs 214. In this month so far, it rallied over 23 percent. On the daily and weekly charts, the stock has formed breakout continuation pattern which is grossly positive for the Minda Corporation.
However, on a short-term time frame, momentum indicators indicate that the stock is into the mildly overbought zone and the possibility of profit-booking is not ruled out if stock succeed to close below Rs 196.
For the next few trading sessions, Rs 196-195 could be the trend decider level for the bulls, sustain above the same we can expect continuation of uptrend up to Rs 225-235. On the flip side, dismissal of Rs 196 could possibly trigger quick short-term correction up to Rs 190-180.
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