Bearish bias below 74k level

Mumbai:: Profit taking in the markets continued as investors wary of higher valuations trimmed their exposure in banking, metals, oil & gas, realty and power shares. “With the US Fed delaying its rate cut decision and inflation still above the comfort level, investors would be risk averse and mostly resort to selective bullish bets,” says Prashanth Tapse, senior V-P (research), Mehta Equities Ltd.

On Tuesday, the benchmark indices corrected sharply, BSE Sensex was down by 384 points. Among sectors, Reality index was the top looser - shed over 3.5 percent whereas despite weak market conditions FMCG index gained over two per cent.

Technically, after muted opening, the market consistently facing selling pressure at higher levels. On daily charts, the index has formed bearish candle. After a long time, Sensex slipped below 50-day SMA (Simple Moving average).

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We are of the view that, the short-term texture of the market is still into the weak side. For the traders now, as long as the market is trading below 20-day SMA or 74,000 the weak sentiment is likely to continue.”

Below the same, the market could retest the level of 73,200-73,000 points. On the other side, above 20-day SMA or 74,000 points, the texture could change. Above the same, the market could bounce back till 74,300-74,400.

 STOCK PICKS

Godrej Consumer (Buy)

CMP: 1322.35 | SL: 1280.00 | Target: 1400.00

The stock has given a strong breakout above its all-time high mark of 1314.00 on its daily as well as weekly charts. With the RSI (14) being around 71 and seeing a minor uptick, the overall momentum looks strong, and the stock looks poised for an upside move towards 1400 and above. A strict stop loss should be kept at the 1280 mark to manage risk well.

MGL (Sell)

CMP: 1,337.65 | SL: 1,375 | Target: 1,275

The stock has given a good breakdown below its important support mark of 1,367 on its daily charts. With the stock witnessing a good surge in volumes and RSI (14) seeing a minor uptick, it appears that the stock should head lower towards the target of 1,275 and below. A stop loss should be kept at the 1,375 mark to manage risk well.

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

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