Quick Pullback Rally More Likely

Mumbai: On Wednesday, the benchmark indices continued profit booking at higher levels as BSE Sensex was down by 984 points. Among sectors, all the major sectoral indices all the major sectoral indices witnessed profit booking at higher levels, but Reality index lost the most, shed over 2.25 per cent.Technically, after weak open throughout the day market registered selling pressure at higher levels. In addition, 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 current market texture is weak, but oversold. Hence, we could expect one quick intraday pullback rally from the current levels.” For the traders now, 200 day SMA (Simple Moving Average) or 77,500 would act as a sacrosanct support zone. Above the same, we could expect one technical bounce back till 78,300-78,500.On the flip side, fresh selloff possible only after dismissal of 77,500. Below which, it could slip till 77,200-77,000.

Prashanth Tapse, Senior VP-Research, Mehta Equities, said: “With inflation once again rising sharply and breaching above the RBI’s comfort level, receding hopes of any major rate cuts in the near future by the central bank put the markets into a tizzy.”

Also, relentless FII selling in local equities, along with rising US bond yields and dismal corporate earnings show has prompted overseas investors to park their funds in relatively cheaper markets like China.

The Indian stock market closed on a bearish note today, with significant declines across major indices. The Sensex fell by 984 points (1.25 per cent) to settle at 77,690.

Vaibhav Vidwani, Research Analyst, Bonanza, said: “Notably, sectors such as Metal, auto and banking faced substantial selling pressure, contributing to the overall market decline. Market sentiment remains cautious as investors weigh inflation concerns and potential policy changes following recent U.S. elections, which have influenced global market dynamics.”

STOCK PICKS

NTPC| TRADE-BUY | CMP: Rs382.30 | SL: Rs370 | TARGET: Rs400

NTPC is exhibiting signs of strength, with the RSI at 32.87 signaling oversold conditions. The stock is currently nearing its 200-day moving average, a key technical level that often supports reversals. This suggests a strong likelihood of price recovery. An upward movement towards the target level is expected, backed by favorable technical indicators. Suitable for buying on dips with a well-defined stop loss.

Eicher Motors| TRADE-BUY | CMP: Rs4583.60 | SL: Rs4400 | TARGET: Rs4800 / Rs4900

Eicher Motors shows a positive setup with RSI at 37.90, suggesting oversold levels and nearing the 200-day moving average. This position indicates potential for a technical bounce, as the stock gains momentum from lower levels. The dual targets are achievable as indicators point towards recovery. The stock may see an upward move, aligning well with key technical parameters. Buying is advised with caution and adherence to the stop loss.

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