Volatile Trading Likely Below 85,000

Mumbai: On Monday, the benchmark indices witnessed a sharp selloff on Monday as BSE Sensex was down by 1,272 points. Among sectors, except Metal index, all the major sectoral indices witnessed a profit booking at higher levels, but Auto index lost the most and shed over two per cent.

Technically, after a weak opening, entire day market consistently facing selling pressure at higher levels. A sharp intraday fall indicates further weakness from the current levels. In addition, on daily charts, the index has formed a bearish candle that also supports temporary 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 and volatile for the traders now, as long as it is trading below 85,000 the weak sentiment is likely to continue. Below the same market could slip till 84,000-82,700. On the flip side, above 84,400 would see a one quick pullback rally till 84,600-84,700.”

Prashanth Tapse, Senior VP (Research), Mehta Equities, said: “Profit taking in Reliance Industries stock and banking counters coupled with a slump in Japan’s Nikkei index spooked Indian markets that saw both Sensex and Nifty crash nearly 1.50 per cent each. While valuations are already on a higher side, the focus would now shift to RBI credit policy announcement next week and the start of quarterly earnings season.”

The sharp rally in recent weeks was the outcome of Fed rate cut and hopes that RBI would also follow suit in its policy meeting, and if the central bank keeps the rates steady it may lead to short term weakness. Globally, if the Israel-Hezbollah war escalates further, nervousness could fuel panic selling going ahead.

On Monday benchmark indices Sensex decline by 1272 points, as a result of outflows of foreign funds and poor performance in Asian markets, which was exemplified by a roughly 5 per cent decline in Japan’s Nikkei index. Significant equities such as ICICI Bank and Reliance Industries also exacerbated market losses by declining. Vaibhav Vidwani, Research Analyst, Bonanza Portfolio,said: “However, the Nifty Metal index rose by 1.2 per cent, continuing its upward trend following China’s recent economic stimulus measures aimed at revitalizing its slowing economy. Notably, NMDC, Hindalco, and SAIL emerged as the top gainers within this sector.”

STOCK PICKS

India Cement | CMP: Rs365 | SL: Rs352 | Target: Rs385 and Rs400

India Cement is currently trading around Rs365 with strong support near Rs352, making it an attractive buy. The stock has an RSI of 53, which is witnessing an uptick, indicating improving momentum. A breakout above Rs370 can lead to a swift move towards Rs385 and Rs400. The stock is seeing an increase in volume, reflecting bullish interest. If the RSI continues to rise, it may signal further upside potential in the near term.

Federal Bank | CMP: Rs196 | SL: Rs189 | Target: Rs205 and Rs215

Federal Bank is trading at Rs196, with solid support at Rs189 and immediate upside potential. The stock’s RSI stands at 64, showing a surge in momentum, suggesting a likely continuation of the current uptrend. The price is maintaining a bullish pattern, supported by increasing demand. A move above Rs200 could accelerate the rally towards Rs205 and Rs215. Continued RSI strength further confirms the positive outlook for this stock.

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

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