Short-Term Mkt Texture Still On Weak Side

Mumbai: On Monday, against the backdrop of weak global sentiment, our market corrected sharply. BSE Sensex was down by 2,200 points. Among sectors, all major sectoral indices traded in the red, with the Metal and Realty indices losing the most Metal down 6 per cent and Realty down 5 per cent.

Technically, the market opened with a significant gap down but, following the gap down, witnessed intraday recovery from lower levels. However, the short-term texture of the market is still on the weak side.

Shrikant Chouhan, head (equity research), Kotak Securities, said: “We believe that the current market environment is extremely volatile and uncertain. Hence, traders may prefer to adopt a cautious stance in the near future.”

In the short term, 72,400 would be the key level to watch. If the market manages to trade above this level, the pullback formation could continue up to 73,800-74,200. On the flip side, a dismissal of 72,400 may lead to further weakness.Below this level, the market could retest the 71,800 mark, and additional weakness may continue, potentially dragging the index down to 71,400.

Already, commodity prices of crude oil and several metals are seeing a downward slide, which is an indication of a slackening demand if the current trend persists. With Dow Futures indicating a precarious start for US markets on Monday, equity benchmark indices worldwide could be in for a rough ride on Tuesday as well.

Vaibhav Vidwani, Research Analyst, Bonanza, said:“This sharp decline was triggered by global economic uncertainties, particularly the escalating trade war between the US and other countries.”

STOCK PICKS

Reliance| TRADE-BUY | CMP: Rs1,165 | SL: Rs1,140 | TARGETs: Rs1,200 and 1,230

Reliance is showing signs of renewed strength after a brief consolidation phase. The stock has managed to hold above key support zones near 1,140 and is now attempting to break past its short-term resistance levels. With improving volume and momentum indicators turning positive, we believe the stock can witness a move towards 1,200 and 1,230 in the coming sessions. Traders can look to initiate long positions at current levels with a stop loss of 1,140.

HDFC Bank| TRADE-BUY | CMP:Rs1,757 | SL: 1,730 | TARGET: 1,800 and 1,830

HDFC Bank is witnessing steady accumulation near its support zone and is showing signs of an upward breakout. The banking space continues to see strength, and HDFC Bank is likely to benefit from the overall positive momentum. The stock has reclaimed its short-term moving averages and is poised for a further up-move. We suggest going long at CMP with a stop loss of 1,730 for upside targets of 1,800 and 1,830.

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