57,250 immediate support level

Mumbai: On Monday, the benchmark indices witnessed sharp selloff. The BSE Sensex was down by 1,023 points. Among Sectors, buying interest continued in PSU banks whereas private banks and financial stocks registered technical sell off, both in indices shed over two percent. Technically, the index has formed a bearish candle and it succeeds to close below 50-day SMA. In last three days the Sensex corrected over 2,200 points.

Direction wise, trend is still in to the down side, but due to sharp fall strong possibility of one quick pullback rally is not ruled out.

"We are of the view that, the index completed one leg of correction and now 57,250 would be the immediate support level. Above the same the market is likely to move up to 57,900-58,200. On the flip side, dismissal of 57,250 may trigger further correction upto 57,000-56,900," says Shrikant Chauhan, head (equity research-retail), Kotak Securities.

Rising crude oil prices and Fed policy tightening fears drag the benchmarks down nearly two per cent Element of fear gripped Dalal Street at the start of a fresh trading week on account of rising oil prices, fed policy tightening and relentless selling done by FIIs camp throughout last week. Also, there was pessimism due to rising bond yields due to stronger than expected US Jobs report.

Commanding attention would be the first Monetary Policy Committee meeting after the Union Budget which starts from Tuesday and will conclude on Thursday.

"We expect no change in key policy rates but given the expected widening fiscal deficit at 6.9 percent for FY22, it will be a tough task for the RBI to maintain liquidity and inflation while supporting growth," says Prashant Tapse, VP (Research) at Mehta equities. .

Technically speaking, Dalal Street could win only if Sensex is able to move above its key hurdle now at 58,698 mark and support falls near 56,911 below this 56,462 level. Net-net, we expect aggressive investors are likely to stay away from equities on backdrop of geopolitical risks that are seen rising rapidly, he added.

Well, going forward, the only big black swan for Indian equities could be the spiking crude oil prices. Oil prices have potential to zoom above the $100 mark on backdrop of a conflict between Russia and Ukraine which could push the Indian economy into a treacherous direction.

Stock Picks

SRF: Above Rs2,452 with a target of Rs2,521 and Stop loss of Rs2,406. It has reversed from the support level of 8 EMA crosses above 40 EMA

VTL: At around Rs2,494 with a target of Rs2,576 and Stop loss of Rs2,451. The stock is in upward trending channel took a resistance breakout; pullback possible

CENTURYPLY: Above Rs636 with a target of Rs658 and Stop loss of Rs618. Rounding bottom formation

POLYPLEX: At around Rs1,915 with a target of Rs1,978 and Stop loss of Rs1,882. It has a support of 8 EMA

ABFRL: Above Rs291 with a target of Rs298 and Stop loss of Rs285. The stock is at support level and moving average crossover on charts

(Source: CapitalVia)