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Hammer candlestick formation indicates short-term weakness

57,750 will be important level to watch

Sensex forms long bullish candle
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Sensex forms long bullish candle

Stock Picks

- CGPOWER: Above Rs194 with a target of Rs196 and Stop loss of Rs192. The stock is in upward trending channel and has given the breakout

- AARTIIND: Above Rs995 with a target of Rs1,004 and Stop loss of Rs986. It has support of 8 and 40 EMA

- CARBORUNIV: Above Rs974 with a target of Rs983 and Stop loss of Rs965. The stock is in upward trending channel and is on the verge of a breakout

- BALKRISIND: Above Rs2,246 with a target of Rs2,268 and Stop loss of Rs2,226. It has a support of 8 EMA

- COFORGE: Above Rs5,633 with a target of Rs5,689 and Stop loss of Rs5,577. It has reversed from the support of 8 EMA

(Source-CapitalVia)

Mumbai: The Indian benchmarks made a flat opening and maintained a narrow range throughout the session. Markets participants was taking support as Indian economy grew at 8.4 percent in the second quarter of the current fiscal. There was some cautiousness as India reported 6,358 new Coronavirus cases on Tuesday.

The benchmark indices witnessed narrow range activity near 20-day SMA. The BSE Sensex was down by 90 points. Among sectors, buying interest was seen Pharma stocks while Metal and selective media stocks registered technical selloff. After a muted opening, entire day the index was trading within the range of 57,721-58,097.

Technically, on intraday charts the index maintained higher bottom formation, but after a strong pullback rally, the index has formed Hammer candle stick formation near important resistance level which indicates strong possibility of short-term weakness.

"For the trend following traders, now 57,750 would be the important level to watch out. Trading above the same, the uptrend momentum will continue up to 58,100-58,300," says Shrikant Chauhan, head of equity research (retail), Kotak Securities.

However, 57,700 strong possibility of quick intraday correction up to 57,500-57,300 is not ruled out, he added. We witnessed a lackluster movement in the market start and an attempt to breach the BSE Sensex 30 Index level of 57,900. Our research suggests that sustaining above 57,700 will be an important level for the market to stay positive in the short term. If the market is able to sustain the level of 57,700, we can witness a positive momentum in the market which can lead to the higher levels near 58,100. We have observed the momentum indicators like RSI and MACD indicating positive momentum in the market, an analyst said.

Kumud Das
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