The market extended losses for the second straight session amid volatility and consolidation, on September 7, following weakness in global peers. The BSE Sensex fell nearly 170 points to 59,029, and the Nifty50 declined 31 points to 17,624, dragged by banks and auto stocks. However, the buying in select FMCG, technology, and pharma counters limited the losses.
The outperformance in broader markets continued for yet another session on positive breadth. The Nifty Midcap 100 index gained half a percent and Smallcap 100 index rose eight-tenth of a percent.
Stocks that were in strong action and outperformed broader markets included Container Corporation of India, which was the biggest gainer in the futures and options segment, climbing 8.5 percent to Rs 726.5 and formed a strong bullish candle on the daily charts with large volumes, though there was some profit-booking at higher levels.
Varroc Engineering jumped 4 percent to Rs 387 and formed bullish engulfing candlestick pattern on the daily charts. In fact, Wednesday's bullish candle engulfed both red candles seen in previous two consecutive sessions.
EIH was also in strong momentum, rising nearly 12 percent to Rs 201, the highest closing level since April 2, 2019. The stock has seen the formation of a robust bullish candle, which engulfed both previous red candles, and the Bollinger Band expanded on both the sides and the closing was above the upper Bollinger Band. The volume was also strong.
Here's what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today:
Varroc Engineering has witnessed a very sharp correction of 88 percent between September 2018 and April 2020. Since then, the stock is consolidating at Rs 280-450 approximately (see chart) and it has made a solid base near Rs 300 levels along volume picking up which hints at further upside.
On the indicator front, weekly MACD (moving average convergence and divergence) is giving bullish crossover along with weekly RSI (relative strength index) rebounding from 40 levels indicating further upside till Rs 525 with plausible support seen at Rs 330.
One can hold (if already bought) and add (if considering fresh buy) at the current market price.
Container Corporation of India
On the weekly chart, the counter is near resistance levels of approximately Rs 750-760. Over the last two months, the stock has seen 25 percent appreciation. If one is already holding, then one should book some profits between Rs 745-755 levels.
Last but not the least, fresh buying in the counter is not advisable at the current market price, as volumes are high at higher price which is a sign of exhaustion.
On the weekly chart, the counter is near resistance levels of approximately Rs 210-220 (which is also its historical tops). Over the two month, the stock has seen 69 percent appreciation. If already holding position, then one should book some profits at current market price. Also note that 210-220 will be supply zone if retested gain.
Last but not the least, fresh buying in the counter is not advisable at current market price, as volume is not in sync with price action (volume is decreasing along with increase price action).
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