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Market texture is non-directional

Traders waiting for either side breakout

Market texture is non-directional

Mumbai: On Monday, the benchmark indices witnessed a lackluster activity as BSE Sensex was down by 116 points. Among sectors, Metal index rallied nearly one per cent whereas pharma and healthcare stocks registered intraday profit booking at higher levels. Technically, after a muted opening entire day, the index hovered between 66,050 and 66,340 points.

In addition, the index has formed inside body candle formation that also indicating incisiveness between the bulls and bears.

“We are of the view that, the current market texture is non-directional perhaps traders are waiting for either side breakout. For the bulls now, 66,400 would be the immediate breakout level. Above the same, the market could rally till 64,600-64,800 level. On the flip side, below 66,050 the selling pressure is likely to accelerate. Below 66,050, the market could retest the level of 65,800-65,700.

As the earnings season gets into full swing, investors will be more inclined to take a bottom-up approach to restructure their portfolios. Ideal Buy on dip sectors are capital goods, automobiles and financials.

Dr VK Vijayakumar, chief investment strategist at Geojit Financial Services, says, “capital goods and automobiles are in a cyclical uptrend and the cycle will last for a few years. There is robust demand for capital goods and the automobiles sector will benefit from demand recovery plus margin improvement arising from fall in commodity prices.” Financials, particularly banking, are doing well and valuations are lower than historical averages.

Stock Picks

BRITANNIA: Buy, CMP Rs4,580, Target Rs4,800, SL 4490

On the weekly scale, the stock had been into an accumulation phase. However, the recent bullish candlestick formations near support zone suggest a new leg of the up move from current levels.

TATASTEEL: Buy, CMP Rs1,27.1, Target Rs134, SL Rs123

Post short-term correction in the stock, a strong reversal formation from its multiple support zone indicates an uptrend in the coming sessions.

UPL: Buy, CMP Rs631, Target Rs665, SL Rs615

On the daily time frame, the counter has formed a Cup and Handle chart pattern and the structure indicates breakout from resistance zone in the near term for fresh up move.

(Source-Kotak Securities)

Kumud Das
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