The market may continue to trade within a range with immediate support at 21,500, followed by 21,300, around the low of the current month. On the higher side, it may face resistance at 21,700, an immediate hurdle, followed by 21,850 area, experts said. If the index decisively breaks 21,300, then major correction may be seen in the Nifty 50.
On January 20, the additional trading day of the last week, the BSE Sensex was down 260 points to 71,424, while the Nifty 50 fell 51 points to 21,572 and formed a bearish candlestick pattern which resembles bearish engulfing kind of pattern on the daily charts, indicating weakness.
The broader markets fared better than the benchmark indices as the Nifty Midcap 100 and Smallcap 100 indices gained half a percent and 0.2 percent.
Stocks that outperformed broader markets last Saturday included Rain Industries, Balkrishna Industries, and IDFC First Bank. Rain Industries has seen strong consolidation breakout of horizontal resistance trendline adjoining multiple touchpoints and climbed more than 9 percent to Rs 164 on the NSE. The stock has formed robust bullish candlestick pattern on the daily charts with significantly higher volumes, and started trading above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving average), which is a positive sign.
Balkrishna Industries has also seen a breakout of long horizontal resistance trendline adjoining highs of September 23, 2021 and January 11, 2024. The stock rallied nearly 5 percent to end at record closing high of Rs 2,766 and formed strong bullish candlestick pattern on the daily timeframe with healthy volumes, while trading above all key moving averages.
IDFC First Bank has been seeing consolidation for several months now. It climbed 2 percent to Rs 87.70 and formed sizeable bullish candlestick pattern on the daily scale. It has seen higher highs, higher lows formation for yet another session and traded above all key moving averages.
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 the last 2 months or so, the said counter has been consolidating between Rs 145 and Rs 155. Recently, it has given a breakout from the said range on a weekly closing basis, which is looking lucrative. Having said that, it has also formed a bullish GARTLEY pattern, which is 1.38 years old, thus making it more reliable.
Also, it has violated a couple of trendlines (refer to the chat). The best part about this bullish reversal is that every bottom has bought with huge volume bars (refer to the chat), which indicates bullish bias in the counter.
On the indicator front, the weekly RSI (relative strength index) has given a trendline violation, which further affirms our bullish stance on the counter. Thus, we advised traders and investors to go long in the range of Rs 160–165 with an upside target of Rs 200, and the stop-loss would be placed at Rs 145 on a daily close basis.
Note: The Gartley pattern is a harmonic chart pattern, based on Fibonacci numbers and ratios, that helps traders identify reaction highs and lows.
From April 2023 till date, the said counter has already given 872 rupees up-move, which comes around a massive 45 percent return. Having said that, volume has dropped during this entire rally (refer to the chart), which is a matter of concern at the current juncture.
Also, there is a lot of overhead resistance in the form of Fibonacci ratio clusters (refer to the chart). Thus, one can book profit in the zone of Rs 2,800–2,900 and wait for meaningful corrections for adding fresh longs.
The rally, which started on March 28, 2023, after making the low of Rs 52., it gave almost 50 point up-move by clocking the high of Rs 101 on September 5, 2023, which comes close to 100 percent return. Since then, it has started correcting and reached a low of Rs 80.80 on November 1, 2023.
The best part about this correction is that volume is dropping continuously, which indicates that bears are losing steam, thus making it a lucrative buy candidate.
On technical terms, price retracement comes around 0.382 percent, along with time retracement following on the same Fibonacci 0.382 percent (refer to the chart), which confirms that most probably the said counter has made a bottom near the Rs 80-81 zone.
Thus, we advised traders and investors to go long in the range of Rs 86–88 with an upside target of Rs 102, and the stop-loss would be placed at Rs 79 on a daily close 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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