The market continued to consolidate for the second straight session on January 1 and the said consolidation is expected to sustain for few more days before the benchmark Nifty 50 gains strength to make an up-move towards 22,000, with support at the 21,700-21,500 area, experts said.
The Nifty 50 lost 92 points from its intraday record high and closed 10.5 points higher at 21,742, while the BSE Sensex was up 32 points at 72,272. The broader markets continued to perform better than benchmarks, as the Nifty Midcap 100 and Smallcap 100 indices gained 0.6 percent and 0.5 percent respectively.
Stocks that were among the strong gainers on Monday included Ashok Leyland, GSFC, and JBM Auto. Ashok Leyland has seen a nice breakout of downward sloping resistance trendline and formed long bullish candlestick pattern on the daily charts for yet another session. The stock clocked 2.4 percent gains at Rs 186 and traded above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving averages), which is a positive sign.
GSFC surged 13.4 percent to end at record closing high of Rs 274 and formed robust bullish candlestick pattern on the daily timeframe with strong volumes. The stock traded above all key moving averages.
JBM Auto has seen a decisive breakout of falling resistance trendline and formed robust bullish candlestick pattern on the daily charts with healthy volumes. The stock jumped 10.6 percent to end at record closing high of Rs 1,619 and stayed above all key moving averages.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
In the previous session, Ashok Leyland showed a good buying. The stock has just given a breakout of the Double Bottom pattern. However, it will be too soon to conclude as it has just given a close above the neckline. A follow up buying will confirm breakout of the said pattern.
Also, since December 21, 2023 not a single candle has given a close below previous day’s low which suggest strength in the ongoing trend.
MACD (moving average convergence divergence) has also shown bullish crossover which is acting as a double confirmation. Volumes are picking up. So, overall signs are suggesting that short term bias is likely to remain bullish.
In short, outlook for Ashok Leyland is positive. A break above Rs 187 is must for fresh buying to emerge, while on the downside Rs 178 is the important support level to watch out.
In the previous session, all the Fertilizers stocks were up and showed a classic rise. Gujarat State Fertilizers & Chemicals (GSFC) also showed a huge rise in the previous session. The stock is trading at the fresh record high. Prices have given a breakout of the trendline which is a positive sign.
Along with this, Bollinger bands have started expanding and prices have continued to give a close above the upper bands. Also, ADX (average directional index) is trading near 42 suggesting that good momentum is likely to continue. For now, nearest support is at Rs 240-241 levels. After sharp rise it would be better adopt buy on dips approach to ride the trend.
In short, trend for GSFC looks positive. Use dips as a buying opportunity for a move towards Rs 285-290 as long as Rs 240-241 holds on the downside.
JBM Auto has been rising recently and is still in a strong uptrend. Prices on the daily chart formed a bullish candle during the previous session. The price closed above Rs 1,608, confirming the rounding bottom pattern's breakout.
The ADX indicator, which we have displayed, indicates whether the stock is trending or trading within a range. The low readings of ADX indicates that the stock is in a range. The Adx of this stock is 58.69 giving an indication of a trending market. Very strong directional strength is indicated by a reading above 25.
In short, trend for this stock is positive. Use dips towards Rs 1,580-1,600 as a buying opportunity for a move towards Rs 1,780-1,800 levels as long as Rs 1,530 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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