Charts suggest further correction

Mumbai: Profit booking continued in the Indian benchmark indices, the Sensex was down by 497 points. Among Sectors, except Media all the major sectoral indices registered profit booking at higher levels. Amid Sectoral indices, IT index lost the most, shed over 2.8 per cent.

"Technically, on intraday charts, the index has maintained lower top formation, it also formed bearish candle on daily charts which suggesting further correction from the current levels," says Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

For the traders now, 55,600 would act as an immediate resistance level. Below the same, the correction wave is likely to continue till -54,800.

On the flip side, fresh uptrend rally possible only after 55,600 breakout. Above which, the index could retest the level of 55,900-56,000. Contra traders can take a long bet near 54,800 with strict 64,650 support stop loss.

Stock Picks

m BANDHANBANK: Stock had been underperforming banking index since long due to fundamental performance. And same is still witnessed on the charts where stock has given a bearish breakout on flag pattern on Tuesday. Indicators are showing pause in upside momentum and therefore BANDHANBANK can be sold for targets of Rs265/258 with stop loss Rs274

m M&M: Stock has rallied almost 100 per cent from March lows in a fast and furious speed. But now it has confirmed a pause in rally and a free fall is expected for short time. Last two sessions saw fall with heavily volumes. It is recommended to SELL M&M future for 2-3 sessions for targets of Rs1112/1080 and stop loss Rs1156.

(Source: Kush Ghodasara)