The market returned to its northward journey on February 8 after two days of correction, after the Monetary Policy Committee announced a smaller repo rate hike of 25 bps. The policy update was in line experts' expectations, while continuing focus on withdrawal of accommodation to ensure that inflation remains within the target range going forward.
The Nifty50 climbed 150 points to 17,872, the highest closing level since January 25, 2023, and formed bullish candle on the daily timeframe, making higher high and higher low formation, while the BSE Sensex rose 378 points to 60,664.
The broader markets also joined the party on positive breadth. The Nifty Midcap 100 index was up 0.9 percent and Smallcap 100 index gained 0.8 percent. Meanwhile, volatility dropped below 14 mark, forming a favourable trend for bulls.
Stocks that were active and performed far better than broader markets included new-age tech companies like Zomato and FSN E-Commerce Ventures (Nykaa).
Zomato shares opened with a strong gap up and rallied 10 percent to Rs 54.30, the highest closing level since January 11. The stock has formed a long bullish candle on the daily charts with small upper shadow, making higher high and higher low formation for the second consecutive session, indicating the possibility of a near term rally. It touched 50-day EMA (Rs 55.13) but failed to hold the same, despite trading above short term moving averages (9 EMA and 21 EMA).
Nykaa jumped over 5 percent to Rs 146.3, the highest closing level since January 13 and has seen formation of bullish candlestick pattern on the daily charts. In fact, it has been in an uptrend for last seven out of eight straight sessions, but is still below all the long term moving averages (50, 100 and 200 EMA).
Max Financial Services shares jumped 6 percent to Rs 757, forming large bullish candle on the daily charts. The stock has given a closing above 50 and 100-day EMA. After sharp downtick of 10 percent, the stock has consolidated for four trading sessions before Wednesday's run-up.
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:
The free fall which started from November 2022 and lasted till January 2023 got arrested around Rs 46-48 levels. Moreover, the entire free fall accounted for a 40 percent cut in price. Recently the said counter has formed a bullish shark structure on a daily scale along with bullish divergence seen on RSI (relative strength index) and MACD (moving average convergence divergence) histogram which is looking lucrative.
One buy in a small tranche around Rs 53-54 and another around Rs 51-52. The upside is expected till Rs 62, with a stop-loss at Rs 48 on a daily close basis.
Since last year, Nykaa has been making lower high and lower lows structures, resulting in a 71 percent cut in stock price. At extreme levels, it has reversed from its crucial support zone of Rs 120-125, which is also a 1.618 (one of the extreme ratios among harmonic arsenal) extension of its previous April 2022 swing high.
From indicator front, bullish divergence was seen on daily RSI along with MACD bullish cross which hints towards early reversal.
One can buy around Rs 143-146 with upside expected till Rs 165 and stop-loss would be Rs 135 on daily close basis.
The rally which started from November 2022 till January 2023 resulted in a whopping return of 40 percent in the counter. Since February 2023, it gave a correction of which got arrested near 0.618 retracement of November 2022 rally.
At current juncture, it has made multiple Doji structures exactly at 0.618 levels (refer to the chart) which hints towards early reversal in the counter.
From indicator front, daily RSI has rebounded from 35 levels along with MACD histogram losing downside momentum which echoes towards upside in the counter.
One can buy around Rs 750-760 with upside expected till Rs 820 and stop-loss would be Rs 715 on daily close basis.
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