After hitting the six-week low in the first half of the session, the market recouped all its losses in the second half by taking support at the 50-day EMA (exponential moving average) and closed moderately higher on August 14. Hence, the low of previous day is expected to play a crucial role for further downside, whereas the 19,550-19,600 zone is likely to be critical for further upside in the Nifty50, experts said.
The Nifty50 gained 6 points at 19,435, and the BSE Sensex 79 points to 65,402, while the Nifty Midcap 100 and Smallcap 100 indices underperformed the benchmarks, falling 0.2 percent and 0.7 percent.
The Bank Nifty managed to get back above the 44,000 mark, led by recovery in the second half and closed with over 100 points gains at 44,091, while the Nifty IT rebounded after a day of correction and jumped 210 points to 31,029, forming bullish candlestick pattern on the daily charts.
Stocks that performed better than the broader markets included Cochin Shipyard, Jindal Worldwide, and NMDC. Cochin Shipyard has seen a breakout of falling resistance trendline adjoining highs of July 25 and August 11, and rose 6.5 percent to close at Rs 687.90. The stock has formed strong bullish candlestick pattern on the daily scale with healthy volumes.
Jindal Worldwide has given a healthy breakout of long downward sloping resistance trendline adjoining highs of January 4 and August 1, and extended uptrend with robust volumes in three consecutive sessions. The stock jumped 4.88 percent to Rs 412.25 and formed long bullish candlestick pattern on the daily scale.
NMDC, too, broke the falling resistance trendline adjoining highs of January 13 and August 1, and clocked more than 4 percent gains at Rs 118.70. The stock has seen formation of long bullish candlestick pattern on the daily timeframe, with multi-fold jump in trading volumes.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
On the daily chart of Cochin Shipyard we can see that on previous day prices formed a bullish candle and closed with a huge gain. Prices recently formed a Rounding Bottom pattern which is a bullish pattern. Any close above Rs 692 levels will give a breakout and the stock will continue its momentum.
Along with this, positive DI (directional indicator green line) in ADX (average directional index) is back to the support level and bounced back again thereby indicating trending move and soon we can expect a breakout in this stock.
The 50-day EMA (exponential moving average) is acting as brilliant support to prices. As per this, nearest support can be placed at Rs 621 levels. In short, a move above Rs 692 will build further momentum in this stock for a move to Rs 760 and higher levels. While on the downside, Rs 621 can act as a near term support.
NMDC on the daily timeframe is in a higher high higher low formation and is trading in an upward sloping parallel channel. Price also broke its previous swing high of Rs 118 which is a positive sign.
We have used Ichimoku cloud. In this up move every time price gave a dip towards the base line (red), it acted as support and even recently prices bounced back from red support line. In a nutshell, NMDC looks bullish.
Any dip towards Rs 115 can be used as a buying opportunity for the target of Rs 123 as long as Rs 110 holds on the downside.
In the previous trading session, Jindal Worldwide showed a good rise. The stock continued to rally and since past 3 trading session prices have given a close above previous day’s high which suggests strength in the stock.
On the daily chart, prices recently gave a breakout of the Double Bottom pattern. A Double Bottom pattern is a classic technical analysis charting formation that represents a major change in trend and a momentum reversal from a prior down move.
Also, we have applied ADX which helps to understand overall momentum. As it is trading near 41 suggesting that good momentum is likely to continue in this stock. Along with this, super trend is also showing positive trend which is acting as a confirmation.
In short, trend for this stock is positive. Use dips towards Rs 400-405 as a buying opportunity for a move towards Rs 460 levels as long as Rs 390 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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