The market snapped three-day winning streak amid volatility and closed third of a percent lower on May 24, tracking correction in the global counterparts after US debt ceiling talks stalled. The selling was seen in metal, and banking & financial services stocks.
The BSE Sensex fell more than 200 points to 61,774, while the Nifty50 dropped over 60 points to 18,285 and formed Doji kind of candlestick pattern on the daily scale indicating indecisiveness among buyers and sellers about future market trend.
Bank Nifty was also under pressure, declining 277 points to 43,678, while the broader markets closed flat with positive bias. India VIX, the fear index increased by 4 percent to move above 13 levels, giving discomfort for bulls.
Stocks that outperformed broader markets included Dixon Technologies which rose 7 percent to Rs 3,514, the highest closing level since January 20 this year, and formed long bullish candlestick pattern on the daily scale with significantly higher volumes.
Mahindra CIE Automotive was also in action, rising 4.7 percent to end at record closing high of Rs 474.3 and formed long bullish candlestick on the daily charts with huge volumes. The stock has broadly maintained higher highs higher lows formation since the end of March.
Aegis Logistics rose over 1 percent to Rs 373. The stock has seen formation of bullish candlestick pattern with long upper shadow on the daily scale indicating some profit taking at higher levels. It has made higher highs, higher lows formation for second consecutive session after recent consolidation, with above average volumes.
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:
Since last 15 months, the said counter has already given 145 percent return. At the current juncture on the monthly scale, RSI (relative strength index) has made a negative divergence where price action is making higher highs and RSI is not complementing it along with a Bearish Engulfing pattern that is trying to emerge slowly.
One should immediately book profit in the zone of Rs 360-380 and wait for a decent correction in the counter. As of now, no fresh longs are advised.
Though Mahindra CIE Automotive is looking lucrative at current levels, one needs to consider that for the last 15 months, it has given a 188 percent return already.
The Bearish Butterfly pattern is formed on a monthly chart near Rs 475-485 levels along with RSI making negative divergence where price action is making higher highs and RSI is not supporting the same, which is a matter of concern.
So, one needs to avoid fresh longs and book profits in the zone of Rs 475-485 levels if already holding positions.
Fresh longs are not recommended.
For the last 3 months, the said counter was consolidating in the zone of Rs 2,800-3,100. Recently it gave a massive breakout from the stated range along with massive volume (refer to chart).
Additionally, we had a very tight range of monthly central pivot range (refer to the chart) which hints towards upside momentum in the counter. Having said that weekly RSI is also above 50 levels, supporting our bullish stance in Dixon.
One can buy in a small tranche in the range of Rs 3,475-3,525 and another in the range of Rs 3,300-3,400 with an upside target of Rs 4,000 and the stop-loss would be Rs 3,099 on a daily closing basis.
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