Pullback formation may continue

Mumbai: On the backdrop of weak global sentiment, the benchmark indices on Wednesday witnessed a profit booking at higher levels as BSE Sensex was down by 203 points. Among sectors, selective pharma, healthcare and reality stocks witnessed buying interest whereas PSU Banks and IT indices lost the most, PSU Banks shed 1.6 and IT was down nearly one per cent. Technically, post gap-down opening market registered a pullback rally. From the day, lowest point market recovered over 550 points.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “For the day traders, now, the 82,000 would be the important support zone. As long as it is trading above the same, the pullback formation is likely to continue. On the higher side, immediate resistance would be 82,500-82,800. However, dismissal of 8,000 could accelerate the selling pressure. Below 82,000, the market could retest the level of 81,700-81,550.”

“Weakness in European and Asian indices, and especially a steep fall in Japanese Nikkei index exacerbated the sentiment in local markets leading to profit-taking by investors in IT, banking, metals and oil & gas shares. However, benchmark indices pared losses in late trades, but still ended weak as the recent upsurge had seen market scaling new highs and bulls were showing signs of wear off.,” says Prashanth Tapse, senior V-P (research), Mehta Equities. “Indian stock markets closed negatively on Wednesday, with the BSE Sensex down by over 171 points to 82,352.64 and the Nifty-50 falling to 25,206.25 points. The decline was influenced by global market downturns and concerns over a potential slowdown in the US economy, particularly following disappointing manufacturing data. Investors are apprehensive ahead of the upcoming US payrolls report, which could impact Federal Reserve interest rate decisions. Gold prices remained stable as market participants awaited this crucial economic data. The overall sentiment in the domestic equity market was affected by global trends and the anticipation of economic indicators that may shape future monetary policies, leading to increased selling pressure among investors,” says Vaibhav Vidwani, research analyst, Bonanza Portfolio.

STOCK PICKS

Dixon | Buy | CMP: Rs12,785 | SL: Rs12,450 | Target:Rs13,600

Dixon has shown a solid recovery from the key support level of Rs12,500, indicating renewed buying interest and the potential for further upside. The RSI (14) around 54.89 suggests that positive momentum is building, supporting a bullish outlook. The strong rebound on the hourly charts reinforces the possibility of continued upward movement. The stop loss is strategically placed to protect against downside risks, with the target of Rs13,600 appearing achievable given the current momentum.

Chola Finance | Buy | CMP: Rs1,487.30 | SL: Rs1,450 | Target: Rs1,625+

Chola Finance has successfully broken above the crucial Rs1,476 resistance level, signalling the start of a robust bullish phase. The RSI (14) near 63 on the daily charts highlights strong momentum, with the stock poised for further gains. This breakout is supported by positive technical indicators, positioning the stock well for continued upward movement. The stop loss is set just below recent support to manage risk effectively, with a target of Rs1,625+ looking attainable in the near term given the bullish sentiment.

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

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