Momentum indicators suggest strong pullback
If index succeeds to trade above 56,950, above which it could retest 57,500-57,700 level; on the flip side, below 56,950, it could slip till 56,600-56,500
image for illustrative purpose
Mumbai: The benchmark indices witnessed volatile trading session, NSE Nifty ends 9 points lower while BSE Sensex was down by 37 points. Among Sectors, profit booking continued in Metal and Financial stocks, both indices registered profit booking at higher levels. Whereas, some buying was seen in selective Pharma and IT stocks.
Technically, after a sharp fall the index opened in the green but corrected sharply. After early morning selloff the index witnessed range bound activity. Lower top formation on intraday charts and bearish candle formation on daily charts, indicate continuation of weakness in the near term. However, momentum indicators suggesting strong possibility of pullback rally from the current levels.
"We are of the view that, the bearish sentiment in the market is still intact and fresh pullback rally possible, if the index succeeds to trade above 200 day SMA (Simple Moving average) or 56,950. Above which, the index could retest the level of 57,500-57,700," says Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. On the flip side, below 56,950, it could slip till 56,600-56,500. The intraday texture of the market is non directional, hence level based trading would be the ideal strategy for the day traders, he added.
Stock Picks
INDUSINDBK: Stock has confirmed a bearish engulfing pattern with heavy volumes and closed below 5-10 day average to give more strength to bears. Stock can be short with stop loss of Rs1210 and Targets Rs1138/1101.
BAJAJFINSV: Stock has given a negative divergence with low volumes but on Tuesday we got second consecutive close below 5-10 day moving averages making stock a strong contender for short call. We can sell stock for the Target of Rs1610/1575 with Stop Loss Rs1734.
(Source: Kotak Securities)
