The market reversed all the gains it made in the previous two days and closed more than half a percent lower on August 17, tracking weakness in global peers. Given the negative momentum, the Nifty50 might test 19,250-19,300 area again in the coming days but closing below the same can take the index down up to the psychological 19,000 mark. But, in case there is a rebound, then 19,400-19,500 would be a crucial hurdle, experts said.
The Nifty50 dropped 100 points to 19,365, and the BSE Sensex declined 388 points to 65,151, but the broader markets fared better than benchmarks on Thursday. The Nifty Midcap 100 and Smallcap 100 indices gained 0.25 percent and 0.14 percent.
The market breadth was not so weak, though we have correction in frontline indices. About 1,062 shares declined against 986 rising shares on the NSE.
Stocks that were in action included REC, BEML, and Escorts Kubota. REC shares ended at a record closing high of Rs 235.1 on the NSE, up 5.4 percent, after recent consolidation. The stock has formed long bullish candlestick pattern on the daily charts, with above average volumes.
BEML has formed strong bullish candlestick pattern on the daily scale, with above average volumes. The stock rebounded sharply, rising 6 percent to Rs 2,041.55 and recouped previous five-day losses after taking a good support at Rs 1,900 levels.
Escorts Kubota continued its strong run up for yet another session, especially after decisively breaking the 11-day consolidation in previous session. The stock rose over 3 percent to Rs 2,790.4 and formed long bullish candlestick pattern on the daily timeframe, with above average volumes.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After the remarkable up move of the last few weeks, the stock witnessed short-term correction from the higher levels. On daily charts, the counter has reversed its trend from its important retracement zone.
The formation suggests a revival of the uptrend from the current levels. For the traders, Rs 1,960 would be the key support level to watch out. Above which the uptrend structure should continue until Rs 2,180.
On the daily and weekly scale, the counter is into a rising channel chart formation with higher high and higher low series pattern. The technical indicators like RSI (relative strength index) and MACD (moving average convergence divergence) also indicating further up trend from current levels which could boost the bullish momentum in coming horizon.
As long as the stock is trading above Rs 225 the bullish formation is likely to continue. Above which, the counter could move up to Rs 252.
On the flip side, fresh sell-off possible only after dismissal of Rs 225. Below the same, the stock could retest the level of Rs 220.
After the sharp upward rally, the stock went into the consolidation mode on the daily scale. The recent breakout in the stock is representing a bullish continuation pattern, which is signifying a new leg of up move from the current levels.
For positional traders, Rs 2,700 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 3,000. However, if it closes below Rs 2,700, traders may prefer to exit from trading long positions.
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