Time For Level- Based Trading

Mumbai: On Monday, the benchmark indices extended their losses, with NSE Nifty shedding 275 points, while BSE Sensex was down by 809 points. Among sectors, all major sectoral indices witnessed profit booking at higher levels, but the Capital Markets and Media indices lost the most, with Capital Markets down 5.6 per cent and Media down 4.5 per cent. Technically, after a gap-down opening, the market consistently faced selling pressure at higher levels and formed a bearish candle on daily charts, closing below the 76,300 mark, which is largely negative.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We believe that the current market texture is weak and volatile; therefore, level-based trading would be the ideal strategy for day traders.”

The 76,300 level will be key to watch, as long as it trades below this threshold, weak sentiment is likely to continue. On the downside, the market could slip to 75,200-74,800. However, if it rises above 76,300, the sentiment may change. Above this level, a pullback formation is likely to continue until it reaches 76,700-76,900.

Prashanth Tapse, senior V-P (research), Mehta Equities, said: “A combination of factors like weak US and European market cues, monthly F&O expiry later this week, persistent FII fund outflows, and muted third quarter corporate earnings so far have continued to push investors in reducing their equity exposure.”

STOCK PICKS

Jindal Steel | TRADE-BUY| CMP: Rs842 | SL: Rs875 | TARGET: Rs800

The stock has shown a significant breakdown below the major support level of Rs855 on its daily timeframe technical charts. With volumes spiking and the stock indicating a potential downward drift toward Rs800 or lower levels, Jindal Steel appears to be a promising short-selling setup. A strict stop loss should be placed at the Rs875 mark. The RSI (14), currently around 30, indicates weak conditions and momentum for the stock.

HCL Technologies | TRADE-BUY | CMP: Rs1,711 | SL: Rs1,755 | TARGET: Rs1,650

The stock has demonstrated a notable breakdown below its immediate major support level of Rs1,745 and has successfully closed below it. With volumes spiking and the trend in IT stocks shifting towards a negative bias, we expect the stock to decline to lower levels of Rs1,650 or below. However, a strict stop loss should be maintained at the Rs1,755 mark to effectively manage risk in this trade.

Strong selling in IT, telecom, metals, oil & gas and realty dragged Sensex below the 76K mark, whereas investors continued to exit mid and small-cap stocks on worries that slowdown in earnings will fail to match the higher valuations assigned to them.