50-day SMA/ 65,650 acts as a trend decider level

Mumbai: The benchmark indices continued profit booking at higher levels as NSE Nifty ends 46 points lower, while BSE Sensex was down by 248 points. Among sectors, selective auto stocks witnessed buying interest at lower levels whereas Metal index shed nearly one per cent.

Technically, after a gap-down opening, the index bounced back sharply from the day’s lowest level, and recovered over 150/500 points. However, the short-term market structure is still in to the weak side. Currently, the index is trading near 50-day SMA (Simple Moving Average).

“For the traders now, 50-day SMA or 65,650 would act as a trend decider level. Above the same, we could see a technical bounce back till 66,000-66,100,”says Shrikant Chouhan of Kotak Securities.

On the flip side, below 65,650 level, the index could retest the level of 65,300-65,200 points. The current market texture is volatile. Hence, level-based trading would be the ideal strategy for the day traders.

Vinod Nair, head (research) at Geojit Financial Services, says: “Amid increasing global political strain, US treasury yield, and underwhelming IT earnings, the domestic market continued to trade with a minor cut. However, some optimism was evident in the equity market given global efforts to stabilize the West Asia conflict, which deescalated crude prices trend.”

Auto sector stocks outperformed, driven by Q2 results outcome. Investors are closely monitoring the Q2 earnings season, US Fed chair speak and West Asia developments. 

Stock Picks

Hindalco:

Sell Hindalco at approximately Rs480 with a target price of Rs465 and a stop loss set at Rs488 is based on the technical analysis, which suggests a downward price trend. This strategy incorporates risk management by employing a stop loss to mitigate potential losses.

L&T Sell L&T near Rs3,056 with a target price of Rs2,931 and a stop loss at Rs3,098. This strategy aligns with the current analysis, which indicates a potential bearish trend in L&T’s stock, while the stop loss serves as a risk control measure to limit potential losses.

(Source-Kush Ghodasara)