Wait for intraday pullback rally

Mumbai: On the backdrop of weak global sentiments, the benchmark indices corrected sharply. BSE Sensex was down by 2,222 points. Among sectors, all the major sectoral indices were traded in the red, but Metal and Reality indices corrected sharply. Metal down 5 and Reality shed 4.70 per cent.

Technically, after a long time Nifty/ Sensex closed below 20 day SMA (Simple Moving Average) which is largely negative. It also formed long bearish candle on daily charts, which supports further 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 but due to temporary oversold conditions, we could expect one intraday pullback rally.”

For the day traders now, the 78,500 would be the immediate reference point. Above the same, we could expect intraday pullback up to 79,000-79,300. On the flip side, below 78,500 the selling pressure is likely accelerate.Below the same, it could retest the level of 78,300. Further down side may also continue which could drag the index till 78,000.

Prashanth Tapse, senior V-P (research), Mehta Equities, said: “Domestic equity indices came under the grip of global markets carnage as a host of external factors like recession fears in the US on the back of weak jobs data, interest rate hike in Japan leading to impact on Yen-carry trade and a raging Middle East conflict triggered massive sell-off across the board. Such corrections in the past were temporary and we saw the market rebounding fast. But we fear that this time it will be quite different from history.”

Vaibhav Vidwani, research analyst, Bonanza Portfolio, said: “Taking cues from the global market domestic market closed on negative note, correction was primarily driven by disappointing US job data which caused worries about a potential recession in US as unemployment rate reached to 4.3%, while there are fears of a reverse carry trade in Yen after a rate hike by the Bank of Japan and further, escalating geopolitical tensions in the Middle East.”

STOCK PICKS

Sandhar Tech | Buy | CMP: Rs661.15 | SL: Rs620 | Target: Rs725

The stock has broken out above its crucial resistance mark of Rs628.90 and is holding well above this level. With the stock maintaining strength and presenting a favorable risk-to-reward opportunity at current levels, we recommend buying Sandhar Tech with a stop-loss (SL) of Rs620 and a target of Rs725 and above.

HDFC Bank | Buy | CMP: Rs1,615.75 | SL: Rs1,599 | Target: Rs1,700

The stock has reached its anchor VWAP support mark of Rs1,615 on the technical charts and is holding well above this level. Trading above important support zones and offering an attractive risk-to-reward opportunity, HDFC Bank is likely to move towards potential targets of Rs1,700 and above, with a stop-loss (SL) set at Rs1,599.

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

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

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