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Profit booking likely in overbought zone

After a sharp uptrend rally on Monday, the benchmark indices witnessed range-bound activity. BSE Sensex was up by 114 points. Among sectors, Auto and PSU Banks indices rallied over one per cent, while intraday profit booking was seen in selective oil and gas and metal stocks

Nifty forms Hammer on weekly chart
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Nifty forms Hammer on weekly chart

Mumbai: After a sharp uptrend rally on Monday, the benchmark indices witnessed range-bound activity. BSE Sensex was up by 114 points. Among sectors, Auto and PSU Banks indices rallied over one per cent, while intraday profit booking was seen in selective oil and gas and metal stocks.

Technically, on daily charts BSE Sensex holding bullish formation and on intraday charts it is consistently forming higher bottom formation which is largely positive.

“We are of the view that, the market structure is bullish, but due to temporary overbought conditions we could see some profit booking higher levels,” says Shrikant Chouhan, Head of Equity Research(Retail), Kotak Securities.

For the traders now, buying on dips and sell on rallies would be the ideal strategy. In the near future, 58,800-58,600 would act as a keysupport levels while 59,500-59,600 would act as a crucial resistance zone for the index.

Kumud Das
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