The market is likely to consolidate around 19,900 levels in coming sessions, especially after Wednesday's sharp correction and given the negative crossover in RSI (relative strength index). If the said level gets breached on the lower side, then it can correct up to 20-day EMA placed at 19,780, but if it holds 19,900 then 20,000-20,100 can be the possibility, experts said.
On September 20, the market saw the biggest single-day loss since July 21. The Nifty50 fell 232 points to 19,901, and the BSE Sensex tanked nearly 800 points to 66,800, while the Nifty Midcap 100 and Smallcap 100 indices were down a third of a percent and 0.9 percent respectively on weak market breadth.
Among sectors, the Nifty Bank plunged nearly 600 points to 45,385, while the Nifty IT dropped 180 points to 32,949 and formed a bullish candlestick pattern with long upper shadow on the daily charts, indicating selling pressure at higher levels.
Stocks that outperformed broader market as well as equity benchmarks included Blue Star, SJVN, and AU Small Finance Bank. Blue Star rallied 13.4 percent to end at record closing high of Rs 907 on the NSE, and formed robust bullish candlestick pattern on the daily charts, with robust volumes. The stock has seen a breakout of upward sloping resistance trendline adjoining highs of March 20 and June 23.
SJVN shares ended at fresh closing high of Rs 81.75, up 6.65 percent and formed healthy bullish candlestick pattern on the daily charts with strong volumes, after consolidation in previous few sessions. The stock traded well above all key moving averages, which is a positive sign.
AU Small Finance Bank has seen a breakout of downward sloping resistance trendline adjoining highs of July 6, July 17 and September 18 this year. The stock rose 3.6 percent to Rs 755.45 and formed long bullish candlestick pattern on the daily timeframe 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:
Though the said counter looks lucrative due to the recent rallies, one needs to be cautious since it is trading way above all major exponential moving averages.
Additionally, the daily MACD (moving average convergence divergence) looks overstretched. If one already bought, then book profits in the range of Rs 900–930. For fresh longs, wait for some corrections until Rs 850 levels.
Since the last 4 months or so, the said counter has already given a 105 percent return. On a daily scale, it has shown negative divergence in the directional movement index (refer to the chart), which is a matter of concern.
Even MACD daily is looking exhausted at higher levels. If one has already bought, then book profits in the range of Rs 80–90. Fresh longs are not advised at the current juncture.
In the previous session, the said counter took out its bearish downward sloping trendline (refer to the chart). Additionally, on the 100-day DEMA (day exponential moving average), it has made a nice base around Rs 720–730, which is looking attractive.
On the indicator front, the daily scale directional movement index has given a bullish cross, and the daily MACD has given a flip-flop structure near the zero line, which is hinting towards a bullish bias in the counter.
Thus, we recommend buying in the range of Rs 748–755 for an upside target of Rs 780, and a stop-loss would be placed near Rs 725 on a daily closing basis.
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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