Time For Level-Based Trading

Mumbai: On Monday, the benchmark indices witnessed a profit booking, with BSE Sensex down by 319 points. Among sectors, the Defence index lost the most, shedding over 5 per cent, while selective financial and IT stocks registered buying interest at lower levels.Technically, in the backdrop of weak global sentiment, our market opened with a gap down but found support near the 20-day SMA (Simple Moving Average) and reversed.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We believe that the current market texture is volatile and non-directional; hence, level-based trading would be the ideal strategy.” For day traders, the 20-day SMA, along with support levels of 77,000 and 76,800, would act as key support zones, while resistance areas for the bulls are around 77,500 and 77,800. However, if the market dips below 76,800, it may retest the levels of 76,500.

Prashanth Tapse, senior V-P (research), Mehta Equities, said: “Slump in global equity markets weighed negatively on Indian benchmarks after Trump announced tariffs on China, Mexico and Canada which fuelled pessimism amongst the investors. The strong bearish undercurrent triggered massive selling in mid and small-cap stocks and the consumption-related FMCG and automobile stocks, as any let up in tariff war could trigger panic selling.”

Besides, rupee depreciating sharply and breaching above 87k mark against the dollar raised concerns that foreign investors are unlikely to reverse the selling trend.

STOCK PICKS

Bajaj Finance |TRADE-BUY| CMP : Rs8,425 | SL : Rs8,300 | TARGET : Rs8,600

The stock has given a good breakout above its all-time high resistance mark of Rs8,250 and managing to hold well above the same. With the pricing witnessing a sharp rise and surging towards new highs, the stock looks poised for a sharp upside move towards potential upside targets of Rs8,600 and above. A strict stoploss should however be kept at Rs8,300 mark to manage risk well

SBI Cards| TRADE-BUY |CMP: Rs825 | SL: Rs810 | TARGET: Rs850

The stock has given a strong breakout above its swing high resistance of Rs815 and is holding firm above the same. With sustained momentum and rising volumes, the stock appears well-positioned for an upside move towards its immediate target of Rs850. A strict stop loss at Rs810 should be maintained to manage risk effectively

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