The market gained strength for the first time in last four consecutive sessions and climbed nearly 1 percent on May 26 as buying interest and short-covering were seen in banking and financial services, IT, metal, and select auto stocks on the F&O contracts expiry day. Positive global cues also supported the market.
The BSE Sensex rallied more than 500 points to 54,253, and the Nifty50 rose more than 140 points to 16,170, while the broader markets also participated in the momentum with the Nifty Midcap 100 and Smallcap 100 indices rising 1.35 percent and 0.77 percent.
The market breadth was in favour of bulls as about five shares advanced for every four declining shares on the NSE.
India VIX fell by 10.14 percent to 22.72 levels, supporting bulls to get back in strength. Experts feel if it falls below 20 mark, then there could be further support to bulls.
Stocks that were action included InterGlobe Aviation, Dr Lal PathLabs, and M&M Financial Services which were amongst top five gainers in the futures and options segment.
InterGlobe Aviation surged 10.4 percent to Rs 1,816, Dr Lal PathLabs jumped 9.5 percent to Rs 2,010, and M&M Financial rose 6.4 percent to Rs 173.35.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After a medium term price correction, the stock took the support near Rs 1,600 and reversed sharply. On last Thursday, the stock opened with a strong note and rallied over 10 percent. A promising price volume intraday rally indicating strong possibility of further uptrend from the current levels.
In addition, after a long time, it succeeded to close above 20 days SMA (simple moving average) and on daily and weekly charts, it has formed long bullish candle.
For the positional traders, Rs 1,700 or 20 days SMA would act as a key support level. If stock manages to trade above the same, we could expect continuation of uptrend wave up to Rs 1,900-1,975.
After a long correction, on last Thursday the stock bounced back sharply, rallied over 9 percent. However, in this month so far, it is down over 23 percent. From last couple of weeks, the stock consistently trading below 20 days SMA and on daily charts, it is holding correction continuation formation.
We are of the view that, the short-term texture of the stock is weak but oversold. For traders, now Rs 2,000 would be the key level to watch out. Strong possibility of quick pullback rally is not ruled out if the stock succeeds to trade above Rs 2,000.
Above this, it could move up to Rs 2,200-2,290. On the flip side, below Rs 2,000 fresh round of selling possible. As a result, the chances of hitting Rs 1,850-1,800 would turn bright.
After a short-term correction, the stock has made a double-bottom formation near the 200-day SMA. On last Thursday, the stock took the support near 50 days SMA and bounced back sharply, rallied over 6 percent.
On daily charts it has formed long bullish candle which is broadly positive for the M&M Finance. Unless it is trading below Rs 165 or 200 days SMA, positional traders retain an optimistic stance and look for a target Rs 185-195.
Fresh buying can be considered now and on dips, if any between Rs 175 and Rs 170 levels with a stop-loss below Rs 165.
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