The market fell sharply in the previous session, the monthly expiry day for January futures & options contracts, led by selling across sectors and unwinding of long positions in large number of stocks. The broader markets also followed suit with the Nifty Midcap 100 and Smallcap 100 indices falling 1.5 percent and 1.2 percent respectively.
On January 25, the BSE Sensex plunged 774 points to 60,205, and the Nifty50 dropped 226 points to 17,892, the biggest single day fall since December 23, 2022. The index has formed long bearish candle on the daily charts with lower high lower low formation, and has seen breakout of small upward sloping support trend line adjoining lows of January 13 and January 20, 2023. Also the downfall was immediately after the double top formation.
India VIX, the fear index has seen a 7.3 percent spike to 14.66 level, giving discomfort for bulls ahead of major events - Union Budget and FOMC meet scheduled for February 1.
However, stocks that bucked trend included Saregama India, which was the second largest gainer in the Nifty500 index. The stock gained 7.6 percent at Rs 356 apiece and formed a robust bullish candle pattern on the daily charts with healthy volumes. Also, there was Morning Star kind of bullish reversal pattern formation considering the performance of last three days, especially after around 17 percent correction since the start of January. Further with Wednesday's rally, the stock has given a close above the previous day's high and well above the median of big bearish candle formed on January 23.
Sona BLW Precision Forgings extended rally for third straight session, rising more than 5 percent to Rs 455 and formed bullish candle on the daily charts with healthy volumes. It closed way above the 50 DEMA (day exponential moving average - Rs 437) and has seen a breakout of downward sloping resistance trend line adjoining highs of December 15, 2022 and January 10, 2023.
Route mobile was also in focus, rising 1.4 percent to Rs 1,247 and formed bullish candle with long upper shadow on the daily charts, indicating some profit booking at higher levels. It gained for second consecutive session, especially after the formation of double bottom with regular bullish divergence on the daily scale RSI (price making lower low, RSI making lower high at the lows December 23, 2022 and January 23, 2023).
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:
Since the last 6 months, the said counter has been making lower highs and lowers lows structure resulting in a 28 percent cut in price. At the current juncture, it has reversed from the potential reversal zone of the bullish AB=CD pattern on a daily scale which comes to around Rs 350 levels (refer to the chart).
Also, it has formed an Inverted Hammer-like structure followed by a confirmation green candle with heavy volumes thus indicating a possible reversal in the counter (refer to the chart).
Last but not least bullish divergence was seen on a daily scale of 14 periods RSI further confirming the bullish stance in the said counter.
One can buy in a small tranche at current market price and another around Rs 340 level if tested again. The upside is expected till Rs 410 with a stop-loss of Rs 317 on a daily close basis.
On October 21, 2021, it made a high of Rs 2,378, since then it starts making lower highs and lower lows structures resulting in a massive 56 percent cut in stock price. At the current juncture, it is taking support near its historical levels of Rs 1,100-1,200.
In addition, it has also made a bullish Gartley pattern with a potential reversal zone of Rs 1,160-1,200. The best part about this setup is that Route Mobile has made double bottom exactly at mentioned potential reversal zone with regular divergence seen on a daily scale RSI.
Since the last couple of trading session buying interest was seen at the counter supported by huge volume activity.
One can buy in the range of Rs 1,225-1,250 for the target of Rs 1,400 and the stop-loss would be Rs 1,145 on a daily close basis.
Sona BLW in the last 2 trading sessions has shown a strong bounce to the upside from a potential reversal zone of Rs 400-420 of a bullish AB=CD pattern. The best part about this pattern is that it is a 13-month-old pattern so the reliability of this pattern is very high.
Having said that, on a daily scale, RSI and MACD have displayed bullish regular divergence thus confirming early reversal in the said counter. In addition, there is a trend line violation on a daily scale which further confirms our bullish stance in SONACOMS.
One can buy in a small tranche in the range of Rs 440-460 and another between Rs 420-430 (if tested again) with upside target around Rs 555 and the stop-loss would be Rs 395 on a daily close basis.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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