Short-term market texture is weak

Mumbai: The domestic markets buckled under relentless selling pressure as investors turned risk averse in the ongoing poll season and further lightened their equity exposure to avoid being caught off guard. “As the election season is heating up, investors are trimming their equity exposure at a faster pace, which can be seen from the drubbing that mid and small-caps received,” says Prashanth Tapse, senior V-P (research), Mehta Equities.

Over the next few weeks, markets could be very volatile with mostly negative bias and we may see traders betting on select stocks, purely based on their fundamentals. On Thursday, the benchmark indices witnessed a sharp selloff, BSE Sensex was down by 1,062 points. Among sectors, almost all the major sectoral indices witnessed profit booking at higher levels but Energy and Metal indices lost the most shedding nearly 3 per cent.

Technically, after a muted opening, the market breached 73,200 support level and post breakdown the selling pressure intensified. On daily charts, the index has formed long bearish candle, which supports further weakness from the current levels.

“We are of the view that, the short-term market texture is weak, but due to temporary oversold conditions, we could see a one technical pullback rally from the current levels,” says Shrikant Chouhan, head (equity research), Kotak Securities. He also added “for the traders now, the 72,550 would act as key level to watch out. Above 72,550pts, the market could bounce back till 72,300-72,500,” says Shrikant Chouhan, head (equity research), Kotak Securities. On the flip side, below 22,000/72,550 range, the weak sentiment is likely to continue an below which the market could slip till 72,100-72,000 range.

STOCK PICKS

LT

CMP: 3,275 | SL: 3,225 | TARGET: 3,500

The stock has touched its major support mark of 3,270 on its daily timeframe charts. With the RSI (14) being around 30, the stock is showing oversold conditions at current levels. With volumes being nearly 6 times its average (30 days) traded volume, we expect the stock to find some support here and eventually head higher towards 3,500 and above. A strict stop loss should be kept at the 3,225 mark to manage risk well.

NMDC Ltd

CMP: 253 | SL: 245 | Target: 280

The stock has re-tested its breakout mark of 255 on its daily as well as weekly timeframe charts. With the RSI (14) being around 56, the overall momentum continues to remain strong, and the stock continues to stay in an uptrend. A strict stop loss should be kept at the 245 mark to manage risk well on NMDC, and we can look for potential targets of 280 and above on the same.

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

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