The market has formed a bearish candlestick pattern that resembles a bearish Engulfing kind of pattern on the daily charts with failure to close above 19,600 points once again amid a rangebound session on the Nifty50 on August 8. After the recent rebound, the index has been in the range of 19,500-19,700 levels, while sustaining above 21-day EMA (19,540), hence unless this range gets broken on either side, consolidation may continue within the same range, experts said.
Bearish engulfing is a bearish reversal pattern, with red candle covering previous day's green candle, but one needs to wait for the following day's action to get confirmation of this pattern.
The Nifty50 fell 26.5 points to 19,571, while the BSE Sensex declined 107 points to 65,847. However, the broader markets continued to perform better than the benchmarks, as the Nifty Midcap 100 and Smallcap 100 indices gained more than 0.2 percent each.
The Bank Nifty bounced back and surged 127 points to 44,964, while the Nifty IT extended the uptrend, rising nearly 50 points to 30,825 and formed a Doji candlestick pattern on the daily charts as the closing was near the opening levels, indicating a tug-of-war between bulls and bears.
Stocks that performed better than the broader markets included Gland Pharma, Indian Bank, and Manappuram Finance. Gland Pharma has formed a long bullish candlestick pattern with long lower shadow on the daily charts, indicating buying at lower levels, after a day of Dojj candlestick pattern formation. The stock was locked in 20 percent upper circuit to close at Rs 1,611 and got back above 200-day EMA (exponential moving average placed at Rs 1,456), which is a positive sign.
Indian Bank ended exactly at the previous record closing high of Rs 392.65, up 13 percent and formed robust bullish candlestick pattern on the daily charts, with multi-fold jump in volumes. The stock traded well above all key moving averages (21, 50, 100 and 200 EMAs), which indicates positivity in the counter.
Manappuram Finance jumped 5 percent to Rs 144.20, the highest closing level since February 11, 2022 and formed strong bullish candlestick pattern on the daily scale with above average volumes. It continued uptrend for third consecutive session, while maintaining well above all key moving averages.
Here's what Foram Chheda of ChartAnalytics recommends investors should do with these stocks when the market resumes trading today:
Since February 2022, Manappuram Finance has been in a consolidation phase. After reaching a low point at Rs 81 levels in June 2022, the stock gradually climbed. During its ascent, it surpassed the 50-day, 100-day, and 200-day moving averages. However, its upward momentum slowed around Rs 133-134 levels, acting as a resistance, and a corrective decline followed. This decline found support near the 200-day moving average, leading to a rebound and indicating a bullish underlying trend.
In the past month, the stock price repeatedly tested the resistance at Rs 131-133 levels. Recently, a breakout occurred above the horizontal trendline resistance at Rs 133, suggesting buying opportunities. Presently, holding the stock, setting a stop-loss near Rs 131, could potentially yield an upward move towards Rs 151.
Gland Pharma endured an almost two-year downtrend in its stock price. After hitting a low of around Rs 860-861 in May this year, the stock experienced a recovery. This upward movement carried the price over the 50-day and 100-day moving averages, signaling a bullish shift and reversal of the downtrend.
The ascent paused near Rs 1,400-1,402, corresponding with a recent resistance level. Notably, the stock recently broke past this resistance at Rs 1,400-1,402 and even surpassed the 200-day moving average, pointing to an emerging bullish trend.
Volume surged with the breakout, affirming the trend reversal. For potential buyers, considering the stock within Rs 1,450-1,480 range on a retracement, setting a stop-loss at Rs 1,304, and targeting an upward move to Rs 1,850 seems promising.
Indian Bank's stock price has adhered to a consistent upward trajectory since 2020. Nevertheless, the past six months have seen the stock largely oscillating within a sideways range, hovering in proximity to the 50-day and 100-day moving averages.
Last month, the stock surged beyond these specified moving averages, garnering some momentum. Subsequently, it breached the previous week's high, unlocking fresh buying prospects.
Remarkably, the stock has recently undergone a substantial surge, amounting to nearly 14.5 percent. Thus, those with the stock in their portfolio are advised to retain their holdings, employing a trailing stop-loss below Rs 348, with an eye on a potential intermediate-term upside approaching Rs 440.
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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