Level-based trading will be ideal

As Adani Group stocks surged (Adani Enterprises over 7 per cent, Adani Ports over 4 per cent), the market’s attention shifts to Friday’s Personal Consumption Expenditures Price Index release and Saturday’s exit poll results, which will influence volatility until the final election results on June 4.

On the last trading day of the week, the benchmark indices witnessed a sharp correction with Sensex shedding over 1450 points. Among sectors, almost all the major sectoral indices registered profit booking at higher levels but IT, oil and gas indices corrected sharply. IT index down 4 per cent and oil & gas shed 3.78 per cent.

During the week, the market registered a fresh all time high of 76,009.68 but due to profit booking at higher levels it corrected sharply. Technically, on weekly charts the index has formed long bearish candle which indicates temporary weakness.

However, the medium term texture of the market is still positive. For the positional traders now, 50 day SMA (Simple Moving Average) or 73,500 would act as a sacrosanct support level. “If it succeeds to trade above the same, then it could bounce back till 74500-75000. On the flip side, uptrend would be vulnerable below 73,500. The current market texture is volatile. Hence, level based trading would be the ideal strategy for the positional traders,” says Amol Athawale, VP-Technical Research, Kotak Securities.

On daily and weekly charts, it is holding higher bottom formation, which is largely positive.  

STOCK PICKS

NMDC

Trade: Buy | CMP: 260.15 | SL: 248.00 | TARGET: 285.00

The stock has touched its trendline support mark of 250.00 on its daily time frame charts. With the stock moving in an uptrend and continuously making higher highs and higher lows, it appears that the stock should eventually head higher towards potential targets of 285.00 and above. A strict stop-loss should be kept at the 248.00 mark to manage risk well. The strong technical structure, supported by a rise in volumes, makes NMDC a strong buy at current levels.

Tata Power

Trade: Buy |CMP: 436.75 | SL: 422.00 | TARGET: 455.00

The stock has touched its anchor VWAP support mark of 425.00 on its daily time frame charts. Strong support is placed at 420.00, which, if broken, can extend the downside move towards 395.00 levels. On the upside, however, immediate resistance is placed near 450.00 - 452.00 levels, which should serve as potential targets for the stock. At current levels, the stock looks like a strong buy.

(Source: Riyank Arora, technical analyst at Mehta Equities)

CMP (Current Market Price); SL (Stop Loss)/All prices in Rs