The market momentum has turned quite strong after three days of consolidation, and to sustain the same trend the Nifty 50 needs to hold on to the 22,300 mark, a pivotal support level. As long as the index trades above the same level, the gradual march towards 22,700, followed by 22,800, will be possible in the coming sessions of the May series, experts said.
On April 25, the monthly expiry day for futures & options contracts, the Nifty 50 jumped 168 points to 22,570 and formed a long bullish candlestick pattern on the daily charts, while the BSE Sensex rallied 487 points to 74,339, continuing the uptrend for the fifth consecutive session.
The broader markets also traded higher with the Nifty Midcap 100 and Smallcap 100 indices rising half a percent and 0.8 percent, respectively.
Stocks that outperformed the broader markets as well as benchmark indices included State Bank of India, Firstsource Solutions, and Dr Reddy's Laboratories. State Bank of India was the second largest gainer in the Nifty 50 on Thursday, climbing 5.12 percent to end at new closing high of Rs 812.70 on the NSE. The stock has formed a Bullish Marubozu kind of candlestick pattern on the daily charts, with robust volumes and now traded above all key moving averages.
Firstsource Solutions has seen a breakout of a downward sloping resistance trendline adjoining highs of February 8 and April 10, and formed a robust bullish candlestick pattern on the daily timeframe with above-average volumes. The stock rallied 7.2 percent to Rs 215.65, and traded above all key moving averages.
Dr Reddy's Labs was the third biggest gainer in the Nifty 50, up 4.5 percent at Rs 6,218.75 and formed a strong bullish candlestick pattern on the daily charts with healthy volumes after several weeks of consolidation as well as a downward move. With this upmove, the stock has started trading above all key moving averages now.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After a short-term correction from the higher levels, the counter was trading in a rangebound formation. However, on the daily and weekly charts there is a range breakout in the counter along with rising volume activity, which suggests a new leg of bullish trend in the near term.
Unless it is trading below Rs 780, positional traders can retain an optimistic stance and look for a target of Rs 870.
The counter has given a breakout from an Inverse Head and Shoulder pattern on daily charts. Therefore, sustaining above the breakout of the range indicates a new leg of uptrend from the current levels.
As long as the counter is trading above Rs 206, the uptrend formation is likely to continue. Above which the counter could move up to Rs 230. On the flip side, a fresh sell off is possible only after the dismissal of Rs 206.
The counter was into a sloping channel for the past many sessions. Eventually, its downward move stopped and witnessed a channel breakout.
Moreover, the strong rebound in the counter from its demand zone on daily and weekly scale suggests that the bullish momentum to remain in the near future.
For traders, Rs 6,030 would be the key support level to watch out for, above which the uptrend structure should continue until Rs 6,690.
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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