Following a rebound from around the lower boundary of the rising channel, notably around 22,150, and the subsequent defence of both 22,200 and 22,300 levels on a closing basis, the market appears poised to find support in these zones in upcoming sessions, prolonging the consolidation phase. Sustaining above the 22,200 mark for several sessions could pave the way for further upward momentum, potentially aiming for record highs. However, a decisive breach of the lower boundary of the rising channel may signal a significant correction, caution experts.
On May 8, the Nifty 50 closed flat at 22,302.50, forming a small bullish candlestick pattern on the daily charts, while the BSE Sensex saw a marginal decline of 45 points, closing at 73,466.
Despite this, the broader market exhibited resilience following a recent downturn, with the Nifty Midcap 100 and Smallcap 100 indices posting gains of 0.7 percent and 0.6 percent, respectively.
Stocks that performed much better than broader markets on May 8 included Hindustan Aeronautics, Ashok Leyland, and Mahindra Holidays. Hindustan Aeronautics rallied 3.8 percent to Rs 3,856, after falling in the last four out of five sessions, especially from record-high levels. The index has formed a long bullish candlestick pattern on the daily charts with average volumes.
Ashok Leyland also rebounded after falling from its all-time high in a previous couple of days, and rose 2.2 percent to Rs 198, forming a long bullish candlestick pattern on the daily charts. The stock has formed a Tweezer Bottom kind of candlestick pattern (not identical), the bullish reversal pattern, and traded above all key moving averages.
Mahindra Holidays has snapped a five-day losing streak and climbed 3 percent to Rs 416. The stock formed a long bullish candlestick pattern on the daily timeframe, with below-average volumes, while with Wednesday's rally, it climbed above all key moving averages.
Here's what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today:
In the current market scenario, a significant event is unfolding within HAL. Analysis of its daily chart reveals the emergence of a Bullish Engulfing candlestick pattern, a crucial signal indicating potential upward momentum. This pattern's occurrence aligns precisely with the daily middle Bollinger band. This confluence of factors bolsters positive sentiment surrounding HAL, suggesting a favourable outlook for the stock.
Furthermore, examining the indicator dynamics, it is observed that the daily stochastic oscillator has made a Hidden Bullish divergence. This condition typically implies an underlying bullish bias within the stock's movement.
Consequently, market participants may consider initiating long positions within the price range of Rs 3,800-3,850, with a target set at Rs 4,100. It's prudent to manage risk by placing a stop-loss order near Rs 3,688 on a daily close basis.
NOTE: This is seen as a hidden bullish divergence if the price is making higher lows (HL) but the oscillator is making lower lows (LL).
Recently, Ashok Leyland experienced a significant breakout after a period of consolidation, fluctuating between the price range of Rs 160 to Rs 185. Presently, it stands near Rs 198. While the current price might seem attractive, cautious investors should exercise patience until the stock undergoes a retest of its breakout level, specifically at Rs 185.
Analysing the indicators, the monthly stochastics have exhibited a positive reversal from the 40 levels, indicating a favourable market sentiment. Therefore, it's advisable to consider purchasing the stock only after it successfully retests Rs 185 level.
Upon confirmation of the retest, one could initiate a long position within the range of Rs 185 to 188, with an upside target set at Rs 215. To mitigate risks, a stop-loss order should be placed near Rs 175 based on daily closing prices, ensuring protection against adverse market movements.
Mahindra Holidays and Resorts India
Since reaching its peak around Rs 450 on April 29, 2024, MHRIL has experienced a significant downturn, plummeting roughly 11-12 percent. However, at present, it appears to have found support at the middle Bollinger band and exhibited a reversal in its most recent trading session.
An analysis of its daily chart indicates the emergence of a Bullish Engulfing candlestick pattern, a crucial signal suggesting a potential reversal and upward momentum. Notably, this pattern coincides with the daily middle Bollinger band, adding to its significance. This convergence of factors enhances the positive sentiment surrounding Mahindra Holidays and implies a promising outlook for the stock.
Moreover, upon examining the indicator dynamics, it becomes evident that the daily stochastic oscillator has exhibited hidden Bullish Divergence, further reinforcing a bullish stance on the stock.
Consequently, investors may consider initiating a long position in the stock within the range of Rs 414-418, with an upside target set at Rs 451. To manage risks effectively, a stop-loss order should be placed near Rs 398 based on daily closing prices, ensuring protection against adverse market movements.
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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