By Shrikant Chouhan
The benchmark indices witnessed profit booking at higher levels, the NSE Nifty 50 ended 153 points down while the BSE Sensex was down by 567 points. Among sectors, Reality, Media, IT and FMCG stocks witnessed correction sharply, down over 1.5 per cent whereas buying interest was seen in selective Energy stocks. Technically, on Tuesday, the Nifty/ Sensex broke the important support level of 16450/55300 and succeeded to close below the same, which is largely negative.
In addition, it also formed bearish candles that also supported short-term weakness. We are of the view that the market structure is weak but mildly oversold. For the traders, as long as the indices are trading below 16500/55400 the short-term texture remains weak, below which the correction wave is likely to continue till 16300/54800 further downside may also continue which could drag the index up to 16225/54500. On the other side, above 16500/55400 chance of hitting 16600-16650/54700-54850 would turn bright.
Technical stocks to buy
Mahindra & Mahindra (M&M)
BUY, CMP: Rs 1,042.55, TARGET: Rs 1,100, SL: Rs 1,020
After the sharp up move, the stock is trading in a range-bound movement well above its short term moving averages. As a result, the formation of a Flag chart pattern on the daily scale is formed which points to bullish movement to resume in the coming horizon.
Bharat Electronics Ltd (BEL)
BUY, CMP: Rs 245.8, TARGET: Rs 260, SL: Rs 240
The counter is into a gradual up move with a higher low series on the daily chart. Additionally, it has formed a Cup and Handle chart pattern with a decent volume. Therefore, the breakout of the range for moving further upside is very likely to occur in the near term.
BUY, CMP: Rs 1,793.7, TARGET: Rs 1,890, SL: Rs 1,755
On the daily time frame, after the sharp up move, the stock witnessed gradual price decline. However, reversal is seen from its important retracement support zone. The formation indicates the stock is very likely to resume its new leg of the uptrend from the current levels.
BUY, CMP: Rs 229.1, TARGET: Rs 242, SL: Rs 222
The stock is trading into a rising channel pattern forming the higher lows series continuously. The strong bullish activity on the daily chart suggest that the counter is likely to maintain bullish continuation formation in the near term.
(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Views expressed are the author’s own.)