Given the sharp upward move and that the momentum indicators are at overbought levels, the market may see some consolidation in the coming days, but overall, the positive outlook for the benchmark indices remain with resistance at 21,500-21,600 levels and strong support at 21,300-21,000 area, experts said.
On December 18, the Nifty 50 index fell 38 points to 21,419 and the BSE Sensex was down 169 points at 71,315 after sharp rally in the previous couple of sessions. However, the broader markets outperformed benchmark indices, as the Nifty Midcap 100 index gained 0.22 percent and Smallcap 100 index was up 0.6 percent.
Stocks that performed far better than broader markets on Monday included Siemens, SAIL, and Shyam Metalics & Energy. Siemens India has decisively surpassed its previous all-time high and ended at fresh record closing high of Rs 4,139, up 6 percent. The stock has formed robust bullish candlestick pattern on the daily charts with healthy volumes and traded above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving averages).
Steel Authority of India (SAIL) has extended uptrend for fourth consecutive session with strong volumes. The stock jumped 3.6 percent to Rs 115.5 and formed long bullish candlestick pattern on the daily scale, while trading above all key moving averages.
Shyam Metalics & Energy has seen a breakout after several days of consolidation and climbed 4.6 percent to end at record closing high of Rs 537. The stock has formed long bullish candlestick patterm with above average volumes and traded above all key moving averages, which is a positive sign.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
Shyam Metalics is trading at the fresh record high. The stock is moving up by following classic Elliott wave theory. Currently Primary wave 3 is ongoing on the upside. As per guidelines wave 3 is the strongest one. Primary wave 2 got completed near Rs 422 levels and since then we witnessed a rise of more than 27 percent.
In this entire rise base line(red) of the Ichimoku Cloud has acted as a support cushion to prices. So, one can continue to go long as long as prices holds and stays above the base line which is near Rs 492 levels. KST (know sure thing) is suggesting that good momentum is likely to continue in this stock.
In short, outlook for Know Sure Thing is positive. Use buy on dips approach to ride the trend with the targets of Rs 560-565 as long as Rs 492 holds on the downside.
Since the past 7 preceding sessions, SAIL has not given a close below previous day’s low which suggests strength in the ongoing trend. SAIL is moving well within an upward sloping channel. Prices are currently trading at the channel resistance and RSI (relative strength index) is also at overbought territory.
A decisive break out of the channel can result into a further rise in this stock. So, it is time to get cautious before creating any new longs until we get a decisive break out of the channel. Until this happens, one should avoid catching tops and should use dips as a buying opportunity.
On the above chart, we can see that since November 10 not a single candle has closed near the mid bands and continued to trade near upper bands.
In short, trend for SAIL looks positive. Use dips as a buying opportunity for a move towards Rs 122 as long as Rs 105 holds on the downside.
Recently, Siemens has been rising and staying in a strong uptrend. The fact that the price closed above Rs 4,000 indicates that the rounding bottom pattern has broken out. The ADX (average directional index) indicator, which we have displayed, indicates whether the stock is trending or trading within a range. The ADX is trading near 41 levels suggesting that a god momentum I likely to continue in this stock. As the reading above 25 means strong directional strength.
In short, trend for this stock is positive. Use dips towards Rs 4,060-4,100 as a buying opportunity for a move towards Rs 4,500-4,550 levels as long as Rs 3,930 holds on the downside.
Follow Ashish Kyal on Twitter - @kyalashish
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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