Pullback formation may continue

Mumbai: On Monday, the benchmark indices witnessed narrow range activity, NSE Nifty ends 84 points higher while BSE Sensex was up by 375 points. Among sectors, FMCG index outperformed rallied two per cent whereas Energy, Oil and Gas indices shed over one per cent. Technically, after a weak open market took the support near 20-day SMA and reversed.

Post reversal it held positive momentum throughout the day. A small bullish candle on daily charts and reversal formation on intraday charts suggesting pullback formation is likely to continue in the near future.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We are of the view that as long as market is trading above 20-day SMA (Simple Moving Average) or 81,000 level, the pullback formation is likely to continue. On the higher side, it could move up till 81,800 and 82,200. On the other side, below 81,000, uptrend would be vulnerable below the same; traders may prefer to exit out from the trading long positions.”

Prashanth Tapse, senior V-P (research), Mehta Equities, said: “Markets rebounded after 4 sessions of loss due to buying in banking stocks, however, undertone remained cautious as most of the sectoral stocks ended in red amid uncertainty over US Fed rate cut later this month. Investors will be closely watching US inflation data to be announced later this week, which could provide more clarity on whether the Fed would undertake its first rate cut in the backdrop of slowing economy and weak jobs data.”

Domestic market closed on a positive note. BSE Sensex closed at 81,559 up by 375 points or 0.46 per cent. Investors remained cautious ahead of the US Federal Reserve’s policy decision next week. The market is divided on whether the Fed will opt for a 25 basis points or 50 basis points rate cut.

Investors remained cautious ahead of the US Federal Reserve’s policy decision next week. The market is divided on whether the Fed will opt for a 25 basis points or 50 basis points rate cut. The outcome of the US presidential election is also weighing on investor sentiment.

Vaibhav Vidwani, research analyst, Bonanza Portfolio, said: “The Ministry of Defence (MoD) has finalized a contract with Hindustan Aeronautics Ltd (HAL) for the supply of 240 AL-31FP aero engines for the Su-30MKI aircraft, valued at over Rs26,000 crore. The agreement was signed by senior officials from both organizations in New Delhi on Monday.”

STOCK PICKS

CL Educate | Buy:Rs123 | SL:Rs115 | Target:Rs132-Rs135

CL Educate is witnessing a breakout from its consolidation zone, indicating potential upward momentum. The stock has shown strong buying interest near Rs120, which acts as immediate support. RSI (14) is trending positively, suggesting further gains in the short term. With a favorable risk-reward ratio, the stock is poised to reach its target levels of Rs132 and Rs135.

GIC RE | Buy:Rs402.65 | SL: Rs380 | Target: Rs440-Rs450

GIC RE has seen a steady uptrend, supported by increased volumes and improving fundamentals. The stock is approaching a resistance zone near Rs440, with strong support around Rs380. A breakout above Rs440 could accelerate the bullish momentum, making it an attractive buy at current levels. Technical indicators favor further upside towards Rs450, with a healthy risk mitigation strategy in place.

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

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