Market in overbought zone

Mumbai: Domestic markets shrugged off the weak global cues, as investors cheered the RBI’s higher growth forecast for FY25 in its credit policy announcement which propelled Sensex to a fresh all-time high above the 76k-mark on massive broad-based buying support.

Also, the arrival of monsoon rains on time and expectations of its even spread across the country also raised hopes of softening inflation going ahead.With the election uncertainty now over and the NDA party most likely to form the government, investors are hopeful that the action will now shift to reforms and the upcoming Union Budget.

In last week, the benchmark indices witnessed extremely volatile activity. After a roller-coaster activity the Sensex was up over 2,700 points. Among sectors, IT index was the top gainer rallied over 8 percent whereas PSU Banks and Oil and Gas indices shed over one per cent.

Technically, during the week the market slip below 50 and 20-day SMA (Simple Moving Average). It also breached 72,000 and 71,000 key support zone. However, eventually it took the support near 70,250 and bounced back sharply.

“From the day lowest point, the market rallied over 6,500 points technically, the short-term formation of market is positive. But due to temporary overbought conditions, we could see range-bound activity at higher levels,” says Amol Athawale, V-P (technical research), Kotak Securities.

On the lower side, the 75,500-74,900 would be the key supports zone, while 75,200-75,800 could act as key resistance areas for the bulls. For the short-term traders buying on dips and sell on rallies would be the ideal strategy.

STOCK PICKS

Wipro

Trade: Buy| CMP: 484.55 | SL: 470 | TARGET: 525

The stock has given a good breakout from its symmetric triangle pattern formation. Calculative price targets of 525 look likely with a strict stop loss set at the 470 mark to manage risk well. Volumes in Friday’s session were nearly six times its average (10-day) traded volumes, which is showing strong signs of momentum and strength in the stock.

Escorts

Trade: Buy| CMP: 3,988.15 | SL: 3,900 | Target: 4,250

The stock has given a good breakout above its recent resistance level of 3,960 on its daily time frame charts. A strict stop loss should be set at the 3,900 mark to manage risk well. With the stock trading well above its anchor VWAP support mark, and volumes in the stock being nearly equivalent to its average (30-day) volume, we can expect potential targets of 4,250 and above for the stock.

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

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