Take cautious stance near resistance level

Mumbai: The benchmark indices witnessed narrow range activity near the all-time high level and closed marginally lower.

Due to the lack of follow-through buying, Sensex once again failed to sustain above the 48,500 mark, which is broadly negative for the market. On the domestic front, metal index outperformed the markets and surged over 4 per cent, whereas FMCG and IT index witnessed selling pressure.

"We are of the view that bulls are still in total control but the intraday chart is showing a temporary pause near 48,500. Hence, traders may prefer taking a cautious stance near the resistance level," says Shrikant Chouhan, EVP (equity technical research) at Kotak Securities.

Technically, the index will still maintain a higher-high and higher-low series. However, on the intraday chart, Sensex has formed a double-top kind of formation, which suggests high chances of quick intraday correction if it trades below 48,000. Below 48,000 levels, correction is likely to continue up to 47,700-47,550. On the other side, 48,500 would be the immediate hurdle for the bulls, and anything above the same indices could rally till 48,800-49,000 levels.

Top 5 Gainers for the day

BHARTIARTL (+3.75 %), INDUSINDBK (+3.22 %), AXISBANK (+2.48 %), BAJAJFINSV (+2.31%) and LT(+1.92%)

We recommend going long on following stocks:

Stock Picks

TORRENT POWER_Above 335 with a target of 340 and Stop loss of 330. It has formed a cup and handle formation.

ADANIENT_Above 525 with a target of 540 and Stop loss of 515. It has a support of 21 and 40 DMA.

SUNTV_Above 521 with a target of 535 and Stop loss of 510. It has given a major level breakout and is expected to further continue the rally.

SBILIFE_Above 922 with a target of 940 and Stop loss of 905. It is trading in an upward trending channel.

ABCAPITAL_Above 93.50 with a target of 96 and Stop loss of 91. It has formed a support of 55 DMA and has reversed from the same.

(Source-CapitalVia)