After a steep fall at the start of the week on January 23 on top of correction in the previous week, the market is expected to consolidate in the coming sessions with immediate support at 21,200 and hurdle on the higher side at 21,500, experts said, adding that beyond this support, a slide to 21,000 can't be ruled out.
Overall, the trend is still favourable for bears given the lower highs, lower lows formation and follow-up to the bearish engulfing kind of candlestick pattern formed on the last week's weekly charts.
On January 23, the Nifty 50 tanked 333 points to 21,239, and formed a big bearish candlestick pattern on the daily charts, while the BSE Sensex fell 1,053 points or 1.5 percent to 70,371. The major correction was seen in the broader markets on weak breadth. The Nifty Midcap 100 and Smallcap 100 indices dropped around 3 percent each.
Stocks that were in action amid Tuesday's turmoil included HDFC Bank, Sun Pharmaceutical Industries, and Chalet Hotels. HDFC Bank has decisively broken its October lows and plunged 3.5 percent to end at Rs 1,427.35, the lowest closing level since October 13, 2022. The stock has formed long bearish candlestick pattern on the daily charts with strong volumes and continued to trade well below all key moving averages (20, 50, 100 and 200-day EMA - exponential moving average), which is a negative sign.
Sun Pharmaceutical Industries gained nearly 4 percent to end at record closing high of Rs 1,378 on the NSE and formed strong bullish candlestick pattern on the daily timeframe with healthy volumes, despite sharp market correction. The stock traded above all key moving averages.
Chalet Hotels has seen a good breakout after more than a week period of consolidation and climbed 3 percent to end at new closing high of Rs 752. The stock has formed bullish candlestick pattern with long upper shadow on the daily charts and saw healthy volumes, while trading 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:
Overall Pharma sector has continued to outperform since many weeks. Sun Pharma made a fresh record high in the previous session. The stock continued to rise despite of broader markets falling.
On the below chart, we can see prices have broken above the upward sloping channel and shown strong positive momentum. The overall trend for the stock is positive unless we see close below the 50-day moving average which is near Rs 1,280 levels.
In short, trend for Sun Pharma is positive. Use buy on dips approach to ride the trend with the target of Rs 1,480 levels. While on the downside Rs 1,280 is the crucial support level.
Chalet Hotels has continued to show strong rise since May 2023. Prices are still gaining momentum and is not showing any slow down as can be seen from RSI (relative strength index).
As shown on daily chart we can see strong breakout above the channel and after retest there is again attempt to move higher. Break above yesterday’s high near Rs 775, the up move can resume in this stock for a move to Rs 810 levels. On downside, channel support is near Rs 710 levels.
HDFC Bank has shown a sharp fall post the disappointing quarterly results. Since then not a single candle has given a close above previous day’s high which suggests weakness.
On the below chart, the red vernicle lines represent 53 days’ cycle. We can see most of the lows are formed on our cycle and after almost every 53 period, HDFC Bank has shown a positive reversal. Currently, Time cycle of 53 days is due by January 25. So, post January 25, we can expect some buying.
However, price action is a must to confirm the same and for that we need a close above Rs 1,475 levels. A close above it can suggest that short term bottom has formed.
In short, trend for this stock is still negative. Any break below Rs 1,400 can drag the price lower towards Rs 1,340 levels. Whereas a close above Rs 1,475 can result into a short covering which can lift the price higher towards Rs 1,520-1,530 levels.
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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