In the face of major selling pressure after seven weeks, the mood turned cautious at Dalal Street. Hence, the consolidation around 22,000 mark can be possible on the Nifty 50 in the coming sessions and, in case the index decisively breaks 21,860 points, further sharp selling pressure can't be ruled out, given the breakdown of higher highs, higher lows formation, but if the index rebounds, it may face hurdle at 22,200-22,300 on the higher side, experts said.
On March 13, the Nifty 50 dropped 338 points or 1.51 percent (the biggest single day loss since January 23 this year) to close at 21,998, and formed a large bearish candlestick pattern on the daily timeframe with higher volumes.
The BSE Sensex was down more than 900 points or 1.23 percent to 72,762, but the Nifty Midcap 100 and Smallcap 100 indices hit hard, falling 4.4 percent and 5.3 percent on disappointing breadth.
Stocks selected for trade spotlight segment included ICICI Bank, ITC, and Coal India. ICICI Bank was the outperformer, rising 0.66 percent to Rs 1,084 and forming a bullish candlestick pattern on the daily charts after Doji or High Wave kind of pattern formation in previous session, with above average volumes. The stock still traded above all key moving averages.
ITC was the star performer of the day among largecaps, rising 4.5 percent to Rs 422.5, but formed a long, bearish candlestick pattern on the daily charts as the closing was lower than opening levels. The stock climbed 8 percent in morning trade, but could not sustain all gains and, as a result, fell below all key moving averages.
Coal India has seen a breakdown of horizontal support trendline as well as 21-day EMA and 50-day EMA (exponential moving averages) and formed a long, bearish candlestick pattern on the daily charts with above average volumes, but on 15 minutes charts, the buying was visible in the counter in late trade with positive crossover in RSI (relative strength index). The stock was down 7.2 percent at Rs 417.
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:
After reaching a peak near Rs 475 mark on January 4, 2024, ITC has experienced a significant decline of approximately 75 rupees, which represents a decline of approximately 16 percent. However, in the subsequent 18 trading sessions, ITC has shown stability by avoiding further declines and has instead consolidated within a range of Rs 400-416.
Notably, in the previous trading session, there was notable buying interest observed at lower levels, accompanied by substantial trading volume. From a technical standpoint, the formation of a bullish AB=CD pattern on the daily chart of ITC within the mentioned price zone of Rs 400-416.
Interestingly, this zone also coincides with the 0.382 percent retracement level of a price swing that occurred between January 2023 and July 2023, as indicated on the chart. Additionally, it has formed complex structure forming on the daily relative strength index (RSI) indicator, resembling a 'W shape' below the 30 level, which suggests a potentially lucrative buying opportunity.
Thus one can buy in the zone of Rs 415-425 with an upside target of Rs 475 and a stop-loss would be placed near Rs 390 on a daily close basis.
Over the past two weeks, ICICI Bank has maintained a narrow trading range between Rs 1,133 and Rs 1,055, leading to the emergence of a candlestick pattern resembling a shooting star on the weekly chart. This formation, coupled with the occurrence of a negative cross in the weekly stochastics near the chart's peak, presents an early cautionary signal for bullish investors.
As a result, it may be prudent for traders to consider booking profits within the range of Rs 1,090-1,100 and exercise caution against initiating new long positions, opting instead to await a more substantial correction in the market.
Following a peak near Rs 465 mark on March 7, 2024, Coal India underwent a notable decline of approximately 55 rupees, marking a significant drop of around 12 percent. However, from a technical perspective, a bullish AB=CD pattern has emerged on the 2-hourly chart of Coal India within the price range of Rs 410-420. Remarkably, this range aligns with the 0.50 percent retracement level of a price swing observed between January 2024 and February 2024, as depicted on the chart.
Furthermore, a bullish cross has been observed on the 2-hourly Stochastic indicator, signaling a potentially attractive buying opportunity. Consequently, investors may consider initiating long positions within Rs 410-420 zone, targeting an upside objective of Rs 450. It's advisable to set a stop-loss near Rs 397 on a daily closing basis to manage downside risk effectively.
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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