With the formation of a 'shooting star' as well as a 'double top' kind of patterns formation on the daily charts, which indicate bearish reversal trends, experts turned cautious and now anticipate some consolidation with a negative bias in the upcoming sessions.
If the index decisively breaks the low of Friday at 21,805, then there will be confirmation to the chart patterns and the index may see some corrections, but in case the index manages to hold the low, then the move towards record high can't be ruled out, experts said.
On February 2, the benchmark indices closed off the day's high due to correction in the later part of the session. The Nifty 50 rallied 156 points to 21,854, and the BSE Sensex was up 440 points at 72,086, while the Nifty Midcap 100 index gained 0.4 percent and Smallcap 100 index rose nearly 1 percent.
Stocks that fared better than the broader markets as well as the benchmark indices included Bharat Petroleum Corporation, Jindal Steel & Power, and Can Fin Homes. Bharat Petroleum Corporation jumped nearly 10 percent on Friday to end at record closing high of Rs 558 and formed robust bullish candlestick pattern on the daily charts with significantly higher volumes. The stock traded well above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving average), which is a positive sign.
Jindal Steel & Power, too, ended at new closing high of Rs 776 on the NSE, up 4.5 percent and formed strong bullish candlestick pattern on the daily timeframe with healthy volumes. The stock remained above all key moving averages which is a positive sign.
Can Fin Homes saw a good breakout of downward sloping resistance trendline adjoining highs of July 25 and December 6, and rallied 4 percent to Rs 828, with above average volumes. The stock has formed bullish candlestick pattern on the daily charts, after a positive opening and traded above all key moving averages.
Here's what Rajesh Palviya of Axis Securities recommends investors should do with these stocks when the market resumes trading today:
With last week's strong 17 percent gains, the stock has confirmed a huge "rounding bottom" breakout at Rs 505 levels along with rising volumes indicating increased participation. Since the past couple of months the stock has witnessed rising volumes which suggests buying force along with price rise.
With this price hike, the stock has also decisively broken previous swing high and registered a new high at Rs 572 levels indicating bullish sentiments. The daily and monthly "Bollinger band" buy signal suggests increased momentum.
The stock is well placed above its 20, 50, 100 and 200 day SMA (simple moving average) and these averages are inching up along with rising prices which reconfirms bullish trend.
Investors should buy, hold and accumulate this stock with an expected upside of Rs 585-685, with downside support zone of Rs 515-500 levels.
With last week's 8 percent gains, the stock has decisively broken out its past 6-7 weeks' consolidation range (Rs 760-Rs 690) on a closing basis. This breakout is accompanied with huge volumes indicating increased participation.
Recently the stock has recaptured its 20, 50 and 100 day SMA and rebounded very sharply which supports bullish sentiments. The weekly price action has confirmed "Cup & Handle" formation breakout at Rs 760 levels on a closing basis.
The stock is in strong uptrend across all the times forming a series of higher tops and bottoms. The daily, weekly and monthly strength indicator RSI (relative strength index) is in positive terrain which shows sustained strength.
Investors should buy, hold and accumulate this stock with an expected upside of Rs 825-885, with downside support zone of Rs 745-730 levels.
Since the past 8-9 months, the stock was consolidating within Rs 825-710 levels, however with last week's gain the stock is poised at the upper band of consolidation range. This "consolidation range" is also supported with 200-day SMA (Rs 736) which remains a crucial support zone.
This recent buying momentum was observed from 20, 50 and 100 day SMA which reconfirms positive bias. The daily and weekly "Bollinger band" buy signal suggests rising momentum. The daily, weekly and monthly strength indicator RSI is in positive terrain which reconfirms rising strength.
Investors should buy, hold and accumulate this stock with an expected upside of Rs 930-960 levels with downside support zone of Rs 800-770 levels.
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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