Further weakness in mkts from current level likely

Mumbai: On Tuesday, the benchmark indices witnessed selling pressure at higher levels. Sensex was down by 686 points. Among sectors, almost all the major sectoral indices witnessed selling pressure, but financial services index lost the most, shedding nearly 2 per cent.

Technically, a reversal formation and bearish candle on daily charts indicating further weakness from the current levels. Shrikant Chouhan, Head, Equity Research, Kotak Securities, said: “We are of the view that, the intraday texture of the market is weak but 50 day SMA (Simple Moving Average) or 78,800 would be the trend decider level for the day traders. Above 78,800, we could see one pullback rally till 79,500-79,700.”

On the flip side, below 78,800, selling pressure is likely to accelerate. Below the same, the market could slip up to 78,500-78,100. Domestic indices underperformed global equity markets as investors resorted to profit-taking in banking, IT, telecom, metals and oil & gas shares. Despite falling inflation levels, economists were of the view that inflation will rise once again, which could mean that RBI will not be in a hurry to tinker with interest rates in the near term

Prashanth Tapse, Senior VP (Research), Mehta Equities, said: “Also, current market valuations are very high and hence we may witness select profit booking with bouts of intra-day volatility in the near term.”

“Domestic markets closed on a red note, with the BSE Sensex dropping by 692 points to settle at 78,956, while the Nifty fell by 0.85 per cent to close at 24,139. The market sentiment was influenced by mixed global cues and recent domestic economic data, including a notable easing of retail inflation to a five-year low of 3.5 per cent in July, which may have provided some support to investors. However, IIP grew at a slower pace at 4.2 per cent in June vs 5.9 per cent in May which brought pessimism in the market”, said Vaibhav Vidwani, Research Analyst, Bonanza Portfolio.

STOCK PICKS

IPCA Labs | Buy | CMP: RS 1,396.85 | SL: RS 1,350.00 | TARGET: RS 1,450.00 and RS 1,500.00

IPCA Labs has achieved a strong breakout above its resistance level of RS 1,383.10 and successfully closed above this mark. With trading volumes spiking to nearly 2.6 times the 30-day average and the RSI (14) approaching 78, the momentum appears robust. We expect the stock to move toward the potential targets of RS 1,450.00 and RS 1,500.00. To manage risk effectively, a strict stop-loss should be maintained at RS 1,350.00.

MRF | Buy | CMP: RS 1,37,487.95 | SL: RS 1,32,000 | TARGET: RS 1,42,500 and RS 1,50,000

MRF has broken out strongly above its anchor VWAP resistance level of RS 1,35,000 and is maintaining its position above this level. With trading volumes aligning with the 30-day average and the RSI (14) near 55, the momentum looks promising. The stock appears poised for an upward move toward RS 1,42,500 and RS 1,50,000. A stop-loss should be set at RS 1,32,000 to manage risk effectively.

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

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