A hike in inflation forecast by the RBI to 5.4 percent for FY24 roiled the Street on August 10, dragging the Nifty50 below 19,600. The index, though, managed to defend the 19,500 level on closing basis, which is seen as an immediate support for it. On the higher side, the 19,600-19,700 zone is crucial which also coincides with falling resistance trendline, hence breaking it off can drive a strong rally, experts said.
The Nifty50 fell 89 points to 19,543 and formed a bearish candlestick pattern on the daily charts, while the BSE Sensex corrected more than 300 points to 65,688. The broader markets also ended lower with the Nifty Midcap 100 index down by 0.08 percent and Smallcap 100 index by half a percent.
The Bank Nifty was a victim of the RBI monetary policy, falling 339 points to 44,542, though it held 44,500 on a closing basis for the fourth time this month, while the Nifty IT saw some profit-taking after a four-day up-move, down 73 points at 30,867.
Stocks that outperformed the broader markets included KNR Constructions, Max Financial Services, and Trent. KNR Constructions jumped 3 percent to settle at Rs 250.4, though wiped out around half of gains from day's high, and formed bullish candlestick pattern with long upper shadow on the daily charts, indicating profit booking at higher levels, but the trading volume has seen mult-fold increase, in fact the highest single-day volume since July 6.
Max Financial Services has also seen some profit booking on the higher side, but still the stock rose 8 percent to end at 52-week closing high of Rs 855. The stock has formed bullish candlestick pattern with long upper shadow on the daily scale, with multi-fold jump in volumes (the highest single-day volume since 2020), after breakout of downward sloping resistance trendline.
Trent has continued higher highs, higher lows formation for second consecutive session, after Bullish Engulfing candlestick pattern formation, which is bullish reversal pattern, on August 8, followed by continuity in strong uptrend for next two sessions with robust volumes. The stock settled at Rs 1,895.45, up 6 percent.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After the sharp upward rally, the stock went into the consolidation mode on the daily and weekly scale. The recent breakout in the stock is representing a bullish continuation pattern, which is signifying a new leg of up move from the current levels.
For positional traders, Rs 1,820 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 2,030. However, if it closes below Rs 1,820, traders may prefer to exit from trading long positions.
On the daily scale, the counter is into a rising channel from last few sessions. Additionally, on the weekly charts the stock has formed a Cup and Handle chart formation. Therefore, post breakout move from the resistance zone the bullish continuation rally is very likely to continue in the coming trading sessions.
For traders, Rs 820 would act as an important support zones while Rs 910 could be the key resistance area for the short-term traders. However, below Rs 820 uptrends would be vulnerable.
The stock has given a breakout of its Symmetrical Triangle chart pattern with a strong bullish candlestick. Additionally, on the daily charts, it has formed a higher bottom formation, hence the structure of the stock indicates further bullish momentum from the current levels.
Unless it is trading below Rs 240, positional traders can retain an optimistic stance and look for a target of Rs 270.
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