The market bounced back on July 31 after ending in the red for two days, but the experts still see the leading indices to move within a range till the Nifty surpasses the recent record high near 20,000 mark, with crucial support at 19,500 points.
We have seen participation from most sectors, barring FMCG, which helped the Nifty50 rally more than 100 points to 19,754 and the index formed a bullish candlestick pattern on the daily charts, while the BSE Sensex jumped nearly 370 points to 66,528.
The Bank Nifty rallied over 180 points to 45,651, while the Nifty IT jumped over 400 points to 29,929 after consolidation of previous eight consecutive sessions.
The broader markets also joined the rally and traded better than frontliners on a healthy breadth, with volatility remaining near historic lows. The Nifty Midcap 100 and Smallcap 100 indices gained nearly 1 percent each as about two shares advanced for every declining share on the NSE.
We have seen several stocks outperforming the broader markets, including Hindustan Copper, CIE Automotive India, and Welspun India. Hindustan Copper has seen a gap-up opening and closed with more than 10 percent gains at Rs 141. The stock has formed robust bullish candlestick pattern on the daily charts with multi-fold jump in trading volumes, after seeing breakout of downward sloping resistance trendline adjoining highs of January 19 and July 28.
CIE Automotive India shares rallied nearly 8 percent to Rs 510 and climbed above 20-day as well as 50-day EMAs (exponential moving averages). The stock has formed long bullish candlestick pattern on the daily charts with above average volumes, after Hammer kind of pattern formation in previous session, which is a bullish reversal pattern.
Welspun India has decisively given a horizontal resistance trendline breakout, after several days of consolidation, which is a positive sign. The stock rallied more than 9 percent to Rs 109.65, the highest closing level since March 10 last year and formed strong bullish candlestick pattern on the daily charts, with robust volumes.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
Hindustan Copper is moving in an impulse pattern from 2020. After completing wave 3 near Rs 196 levels (which is the largest and often extended wave as per wave theory), prices later moved down towards Rs 80 levels and bounced back from there which completes wave 4 on the downside.
Currently primary wave 5 is unfolding on the upside. The stock has also formed Inverted Head & Shoulder pattern and the neckline has broken near Rs 126.
Target as per Head projected on upside from neckline is at Rs 208 levels. As long as Rs 128 holds on the downside further bullish momentum is likely to continue.
CIE Automotive rose sharply which came after good quarterly results. The stock settled with a huge gain at the end of the session. Prices are moving well within an upward sloping channel.
We have shown Bollinger bands. After reversing from the lower bands, the stock witnessed a good rise. However, prices failed to give a close above the mid bands. Any close above mid bands Rs 515 with follow up buying is needed which can take prices higher towards the upper bands near Rs 570, while Rs 470 can act as a near term support.
On the daily timeframe, as we can see in the chart from the past three months prices were consolidating in a Triangle pattern. Due to sharp move, prices gave a close above Rs 104 levels which confirms breakout of the said pattern and sudden rise in volumes acted as a double confirmation.
On the other hand, base line (red) has acted as a support and every time stock has bounced back on the upside by taking support of the same. So, as per this nearest support is at Rs 100 levels.
Trend for Welspun India looks bullish. Any dip towards Rs 105 can be used as a buying opportunity for a move towards Rs 122 as long as Rs 100 holds on the downside.
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.
Follow Ashish Kyal on Twitter - @kyalashish
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