Current market texture still bullish

Mumbai: The benchmark indices on Monday witnessed a promising uptrend rally as BSE Sensex was up by 938 points. Among sectors, PSU Bank, despite strong momentum, Reality index shed over one per cent. Technically, after a gap-up opening, the market held the positive momentum throughout the day.

On daily charts, the index has formed bullish candle and currently it is comfortably trading near 20-day SMA (Simple Moving Average).

For the trend following traders, now, the 73,900 or 20-day SMA would act as a key support level. Above the same market could move up till 75,000-75,200 range.

“We are of the view that, the current market texture is bullish, but buying on intraday dips and sell on rallies would be the ideal strategy for the day traders,” says Shrikant Chouhan, head (equity research), Kotak Securities. On the other side, below 73,900 level, traders may prefer to exit out from the trading long positions.

Markets witnessed phenomenal buying support as Sensex quickly moved towards the crucial 75,000 mark after investors cheered strong corporate earnings from select frontline banking and cement companies, indicating their smooth sailing despite the global vagaries.

Optimism prevailed from the start of the trading session as cooling of US bond yields and letdown in Middle-East conflict coupled with a drop in crude oil prices generated a lot of enthusiasm amongst the investors.

“With the polling season on, the market is hoping for a clear mandate in favour of the ruling party. The two-day Fed’s monetary policy meeting starting Tuesday will be closely watched by global investors, although markets don’t expect any change in the policy outcome,” says Prashanth Tapse, senior V-P (research), Mehta Equities Ltd.

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

STOCK PICKS

BHEL

CMP: 276.90 / SL: 260 / Target: 300-310

The stock has given a good breakout above its recent swing high mark of 275.85 and seen to be retesting its breakout level. With the RSI (14) being at 70; the overall momentum looks good and stock is poised for a potential upside move towards 300-310. A stop loss should be kept at 260 mark for all existing longs.

BAJEL

CMP: 267.15 / SL: 245 / Target: 300

The stock has seen to be retesting its anchor VWAP support mark of 265-270. With the overall initial trend being positive and risk reward looking fairly attractive at current levels, we advise a buy on BAJEL with a strict stop loss at 245 mark for potential targets of 300 and above.

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