The market closed a volatile session with moderate losses on February 23, the expiry day for monthly derivative contracts. The benchmark indices continued a downtrend for the fifth consecutive day due to selling pressure in heavyweights like Infosys, HDFC, HDFC Bank, Reliance Industries and L&T.
The BSE Sensex corrected 139 points to 59,606, while the Nifty50 fell 43 points to 17,511 and formed a bearish candlestick pattern with lower and upper shadows on the daily charts, making lower highs lower lows for the fifth session in a row.
The broader markets also settled the session in red with the Nifty Midcap 100 and Smallcap 100 indices falling 0.15 percent and 0.08 percent, respectively.
Stocks that outperformed broader markets included Zomato, which rallied nearly 4 percent to Rs 55 and formed a bullish candle with an upper shadow on the daily charts, with above-average volumes. Also, there was a tweezer bottom kind of pattern formation, which generally indicates a bullish reversal. With Thursday's move, the stock traded above near-term and short-term moving averages (5, 9, 21 and 50-day EMA - exponential moving average).
Bharat Dynamics climbed more than 5 percent to Rs 970, the highest closing level since December 8, 2022, and formed a long bullish candle on the daily charts after the Doji candle formation, with high volumes. The stock has decisively broken the long downward-sloping resistance trendline adjoining highs of October 27, 2022 (record high) and February 1, 2023.
Sonata Software after a couple of days' break rebounded sharply by more than 5 percent and formed a long bullish candle on the daily charts with healthy volumes. The stock traded above all key moving averages, indicating a positive mood among the participants. Overall the stock has been in momentum since the start of this calendar year.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
In this month so far, the stock has rallied nearly 15 percent. Post short-term correction, the stock took support near 20 days and reversed sharply. After a promising reversal formation, the stock is holding a higher bottom formation which is largely positive.
Currently, the stock is trading near the 50-day SMA (simple moving average Rs 54.20), and the texture of the chart indicates a further uptrend from the current levels.
For positional traders, Rs 52.5 would be the sacrosanct level, trading above the same we can expect an uptrend continuation wave up to Rs 58-60.
In this week so far, the stock gained over 10 percent. Post promising reversal it consistently holds a positive momentum. The short-term texture of the stock is strong but due to temporary overbought conditions, we could see rangebound activity in the near future.
Hence, buying on dips and selling on rallies would be the ideal strategy for traders. Rs 930-910 would act as an immediate support zone for Bharat Dynamics while Rs 1,000-1,010 could act as an important hurdle for the stock. However, below Rs 910 or a 50-day SMA (simple moving average) uptrend would be vulnerable.
Last Thursday, despite tepid market conditions, the stock held a positive momentum. In this month so far, the stock rallied over 15 percent. After a technical breakout, the stock consistently held higher high and higher-low series formation, which is broadly positive.
The texture of the stock suggests, as long as it is trading above Rs 700, the uptrend formation is likely to persist. Above this, the stock could move up to Rs 750. Further upsides may also continue which could lift the stock to Rs 765. On the other side, below Rs 700, traders may prefer to exit from trading long positions.
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