Bearish Patterns Hint At Further Downside

Mumbai: On Tuesday, the benchmark indices witnessed profit booking at higher levels. The Sensex was down by 636 points. Among sectors, the Private Bank index lost the most, shedding 1.25 per cent, whereas despite the weak market sentiment, the Reality and Defense indices outperformed, rallying over 1 per cent.

Technically, after a positive open, the market slipped below the 20-day SMA (Simple Moving Average) or 81,300, and thereafter, selling pressure intensified. On daily charts, a long bearish candle has formed, and on intraday charts, a lower top formation is holding, which is largely negative.

On the upside, if the index moves above 81,000, a quick pullback rally towards the 20-day SMA or 81,300 could occur. Further upside may also continue, potentially lifting the market up to 81,500. Shrikant Chouhan, Head - Equity Research, Kotak Securities, said: “We believe that the intraday market texture is weak, but a fresh sell-off is possible only if the level of 80,500 is breached. Below this, the index could decline to 80,100-80,000.”

STOCK PICKS

Hindustan Zinc (HIND ZINC) | TRADE-BUY: Rs469 | SL: Rs450 | TARGET: Rs510

Hindustan Zinc has given a decisive breakout above its previous resistance zone near Rs460, supported by healthy trading volumes. The stock is now trading above key short-term and medium-term moving averages, indicating a continuation of bullish momentum. The RSI stands at 68, suggesting strength in the current move while still offering room for upside. The price structure is positive, forming higher highs with strong follow-through buying. A sustained move above Rs465 could open the way for the stock to test Rs510 in the near term. As long as it holds above Rs450, the technical outlook remains favorable for long trades.

Jindal Stainless Ltd (JSL) | TRADE-BUY: Rs666 | SL: Rs640 | TARGET: Rs720

Jindal Stainless is showing signs of a strong upward breakout above the crucial Rs660 level after several sessions of consolidation. The stock is forming a bullish flag pattern and is currently trading above all key moving averages, reflecting strong buying interest. The RSI is at 70, confirming positive momentum with potential for a further rally. The volume pattern also supports the breakout, indicating sustained accumulation. With no major resistance until Rs720, the stock presents an attractive short-term opportunity. As long as JSL remains above Rs640, the near-term trend is expected to stay strong, favoring a buy-on-dips strategy.

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