Further weakness possible below 80,500 level

Mumbai: The benchmark indices continued selling pressure at higher levels as BSE Sensex was down by 931 points. Among sectors, all the major sectoral indices traded inthe red, but PSU Bank index lost the most by shedding over four per cent. Technically, after a positive opening one more time market took the resistance near 81,500 and reversed sharply. From the day highest point market corrected over 1,300 points.

On daily charts, the index has formed bearish candle and it also holding lower top formation, which supports further weakness from the current levels.

Shrikant Chouhan, head (research), Kotak Securities, said: “We are of the view that, as long as the index is trading below 80,500 level, the weak sentiment is likely to continue. On the down-side market could continue the correction wave till 79,800-79,500. On the flip side, above 80,500 the pullback formation is likely to continue till 80,800-81,000. Short-term traders should remain cautious and be very selective as there is a risk to get trapped at lower levels.” Below which, the selling pressure is likely to accelerate. Below which, the market could retest the level of 80,600-80,500. However, above 81,500 the market could bounce back till 81,800-82,000.

Prashanth Tapse, V-P (research), Mehta Equities, said: “There has been no respitefrom FIIs selling in local equities in the current month so far, which has been creating uncertainty among the domestic investors. Also, foreign investors are fleeing Indian equities to invest in relatively cheaper locations such as China, especially after the stimulus announcement by its government to boost its slowing economy.” Along with sectoral stocks, mid and small-cap stocks too bore the brunt as persistent buying had led to valuations in several stocks getting expensive and hence the breather.

Stock Picks

BAJAJ AUTO| TRADE-BUY | CMP: Rs10,368 | SL: Rs10,200 | TARGET: Rs11,400

The stock has touched its key support level of Rs10,000 and formed a strong bullish candle. With RSI (14) around 35, indicating oversold conditions, it presents a favorable risk-to-reward opportunity for buyers at current levels. With a strict stop loss at Rs10,200, the stock has the potential to move towards targets of Rs11,400 and beyond. Additionally, volumes are nearly 1.5 times the average of the last 10 days, suggesting strong momentum.

M&M| TRADE-BUY | CMP: Rs2,887 | SL: Rs2,850 | TARGET: Rs3,080

The stock has reached its critical support level and formed a bullish candle. With RSI (14) around 42 and showing a positive uptick from lower levels, it signals an increase in momentum. A strict stop loss at Rs2,850 offers a solid risk management setup, while the stock targets Rs3,080. Volumes are approximately 1.5 times its average of the last 10 days, highlighting good momentum potential.

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