Market texture still non-directional

Mumbai: On Monday, the benchmark indices witnessed a positive momentum as BSE Sensex was up by 131 points. Among sectors, selective Auto and Pharma stocks witnessing buying interest at lower levels, whereas Media index corrected - was the top looser, shed over one per cent.

Technically, after a gap-down opening, the market took the support near 10-day SMA (Simple Moving Average) and bounced back sharply. On daily charts, it has formed a bullish candle, which is largely positive.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We are of the view that larger market texture is still non-directional. Hence, level-based trading would be the ideal strategy for the day traders. Now, the 77,000 or 10-day SMA would be the key support level.”

Above the same, the market could rally up to 77,700 points. Further upside may also continue which could lift the market till 77,900 points. On the flip side, below 77,000 level, the selling pressure is likely to accelerate. Below the same, the market could slip till 76,800-76,600 range.

Markets stayed volatile ahead of this week’s monthly expiry, as key benchmark indices ended with modest gains after a sharp fall in early trades amid selective buying in auto, power and capital goods shares.

“While selling in IT, metal and oil & gas pared gains. Stocks may see sharp gyrating during the week investors would resort to value buying in select counters,” says Prashanth Tapse, senior V-P (research), Mehta Equities Ltd.

STOCK PICKS

Granules | Buy | CMP: 487.60 | SL: 480 | TARGET: 520

The stock has given a strong breakout above its all-time high mark of 485.95 and successfully managed to close above the same. As of Monday’s trading session, the stock gave a re-test to the breakout level of 485.95 and the risk-reward looks favorable at current levels. RSI (14) being near 65.35 indicates that the stock has good momentum and is poised for an upside towards the target of 520 with a strict stop loss to be kept at 480 levels.

Cosmo First | Buy | CMP: 778.80 | SL: 750 | TARGET: 900

The stock has given a strong breakout above its recent resistance mark of 773.05 and is witnessing a re-test to the breakout level. With the RSI (14) being near 79.08, the overall momentum looks strong for potential targets of 900 and above. A strict stop loss should be kept at the 750 mark to manage risk well. Volumes in Monday’s session were almost equivalent to its average (30 days) traded volume on the stock.

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

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