The market had a gap-up opening, and it recorded healthy gains on March 21, but the sustainability of this up-move is the key to watch out for, though volatility declined sharply to over a three-month low. The low of previous day around 21,950 and 50-day EMA (exponential moving average) placed around 21,860 are support levels for the immediate term as breaking these levels may drag it down towards 21,700 again, but in case of further recovery, 22,100-22,200 are immediate levels to track on the higher side, experts said.
On March 21, the BSE Sensex rallied 540 points to 72,641, while the Nifty 50 climbed 173 points to 22,012 and formed a small-bodied bullish candlestick pattern with upper and lower shadow on the daily timeframe.
The broader markets also gained major strength with a healthy breadth, as the Nifty Midcap 100 and Smallcap 100 indices rose 2.4 percent and 2.5 percent respectively.
Stocks that outpaced the broader markets on Thursday included National Aluminium Company, BHEL, and REC. National Aluminium Company has seen a healthy consolidation breakout and jumped 5.8 percent to Rs 146 on the NSE. The stock has formed bullish candlestick pattern on the daily charts with above average volumes, while it was above 10 and 50-day EMAs.
BHEL has also seen a consolidation breakout and there was a gap up opening, though the volume was lower than average. The stock gained 5.5 percent at Rs 237 and formed bullish candlestick pattern on the daily charts, while with this upmove, it traded above all key moving averages now.
REC has snapped four-day weakness and rallied 6.4 percent to Rs 450 with above average volumes. The stock has formed long bullish candlestick pattern on the daily scale, after defending horizontal support trendline in the previous session. It closed just above 10-day and 50-day EMAs.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After a decline from the higher levels, the counter rebounded from its multiple support zones on the daily charts. It is witnessing a steady recovery from the lower levels. The up move in the counter along with decent volume activity near support zone indicates that the downside is restricted.
Unless it is trading below Rs 430, positional traders can retain an optimistic stance and look for a target of Rs 480.
On the daily charts, the counter was into a rangebound mode from the past few sessions. Eventually, it has given the range breakout and it has formed higher bottom formation. Therefore, the closing above the resistance line indicates further bullish momentum to continue from the current levels.
For the trend following traders, Rs 140 would act as support level. Above the same, it could move up to Rs 155 levels.
After the short-term correction in the counter from the higher levels, the downward momentum has taken a pause. On the daily charts, the counter has formed a rounding bottom chart formation along with decent volume activity and it has reversed its trend from its support zone.
The formation suggests a revival of the uptrend from the current levels. For the traders, Rs 230 would be the key support level to watch out. Above which the uptrend structure should continue until Rs 255.
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