Equity benchmarks as well as broader markets are expected to consolidate in the coming days with the Nifty50 likely to move in the 20,200-19,900 range. The decisively breaching on either side of the range may give a firm direction to the market and, till then, the consolidation may susatain, at least till the outcome of two-day Fed policy meeting scheduled on September 20, experts said.
On September 18, the Nifty50 slipped 59 points to 20,133, and the BSE Sensex declined over 240 points to 67,597, while the Nifty Midcap 100 and Smallcap 100 indices corrected four-tenth of a percent and half a percent.
The key sectors were under pressure with the Bank Nifty declining more than 250 points to 45,980, while the Nifty IT shed 225 points to 33,130 and formed a bearish candlestick pattern on the daily charts.
Stocks that outperformed broader markets included Bank of Baroda, Mahindra & Mahindra, and Yes Bank. Bank of Baroda remained above the falling trendline for third straight session, rising more than 3 percent to Rs 217 and formed bullish candlestick pattern with minor upper shadow on the daily timeframe, with above average volumes. The stock remained above all key moving averages.
Mahindra & Mahindra hit a historic high on Monday after breakout of upward sloping resistance trendline and traded with strong volumes on last two sessions. The stock gained 2.5 percent to end at record closing high of Rs 1,641.5 and formed bullish candlestick pattern with long upper shadow on the daily charts, indicating some profit booking at higher levels.
Yes Bank has seen above average volumes for major part of sessions since the start of September month and also took a support at the long downward sloping resistance trendline, which is a positive sign. The stock rose 1.4 percent to Rs 18.55 and formed bullish candlestick pattern with long upper shadow and minor lower shadow on the daily charts.
The market was shut on Tuesday, September 19, for Ganesh Chaturthi.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
The stock is moving well within upward sloping channel. Recently prices bounced back on the upside by taking support of the channel. So, with follow up buying we can expect a move towards the channel resistance which is near Rs 1,780-1,800 levels.
On the other hand, prices bounced back from the Ichimoku Cloud. So, Cloud can act as a near term support which is near Rs 1,540 levels. Along with this, MACD (moving average convergence divergence) has also turned bullish by showing a positive crossover. In short, all the signs are suggesting that further bullish momentum is likely to continue in this stock.
Any break above Rs 1,670 can take price further higher with the target of Rs 1,800, while on the downside, Rs 1,540 can act as a near term support.
In the previous session (September 18), Yes Bank showed a good rally just like its peer companies. Also, mid bands continued to act as a support cushion to prices and for now mid band can act as near-term support which comes near Rs 17.6 levels. Prices are facing resistance near Rs 19 level as prices failed to give a close above the same since last 4 times.
In short, overall, outlook for Yes bank looks positive. Any daily close above Rs 19 is must for further bullish momentum to continue and then we can expect a move towards Rs 21-22, while Rs 17.6 can act as a near term support.
On the daily chart, prices have formed a rounding bottom pattern which is a bullish pattern. The break out of the pattern occurred two session prior and after retesting prices bounced back on the upside.
Traders who already holding position in this particular stock should hold with a stop-loss of Rs 207. Whereas someone looking for making new positions should use any dips towards Rs 213 as a buying opportunity for the target Rs 230 as RSI (relative strength index) is trading in overbought zone and we need RSI to cool down.
Follow Ashish Kyal on Twitter - @kyalashish
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