Market broadly turns negative
72,300 to act as a key resistance zone, below the same, the correction wave is likely to continue till 71,500-71,400. On the flip side, above 72,300 the market could bounce back till 72,500-72,600
image for illustrative purpose
Mumbai: On Tuesday, the benchmark indices corrected sharply, BSE Sensex was down by 735 points. Among sectors, almost all the major sectoral indices were traded in the red, but IT, Media and Pharma indices lost the most, shed over 2.5 per cent.
Technically, after gap down the market slip below 50-day SMA (Simple Moving Average) and post breakdown the selling pressure intensified. On daily charts, the market has formed bearish candle and it also holding lower top formation on intraday charts, which is broadly negative.
“We are of the view that, the current market texture is weak, but oversold. Hence, we could expect one quick pullback rally from the current levels. For the day traders now, the 72,300 would act as a key resistance zone,” says Shrikant Chouhan, Head Equity Research, Kotak Securities.
Below the same, the correction wave is likely to continue till 71,500-71,400. On the flip side, above 72,300 the market could bounce back till 72,500-72,600. The current market texture is volatile hence level based trading would be the ideal strategy for the day traders.
Prashanth Tapse, senior V-P (research), Mehta Equities, says: “Pessimism in the markets continued on the back of broad-based selling, as investors worried over expensive valuations in mid & small-cap stocks are also exiting frontline counters. Investors preferred to exit long positions ahead of the US FOMC Meeting, which will put the spotlight back on the interest rate scenario going ahead.” With the sharp fall, Nifty faces resistance at 22,001-22,251 levels and has support in the range of 21,657 to 21,375.
Stock Picks
Oberoi Realty (Buy)
The stock continues to trade on a positive note, consolidating well over the last few days. Major support lies at the 1,265 mark, while overhead resistance is near 1,450-1,490 and 1,575. Despite negative market sentiment, the overall momentum and trend of the stock continue to appear positive. Any decline towards the 1,330 – 1,340 zone should offer an attractive buying opportunity for the stock.
BPCL (Sell)
The stock has experienced a significant breakdown below its recent support level of 560 on its daily charts. At the current market price of 557.70, the risk-reward ratio looks favorable on the sell side with a stop loss of 570 for potential targets at the 510 and 525 levels. Weak market sentiment and pressure on oil marketing companies are expected to contribute to further downward movement in the stock.
(Source_Riyank Arora Technical
Analyst at Mehta Equities)
