Pullback formation is likely to continue in near future

Mumbai, Jul 21

Today, the benchmark indices intraday recovered from lower levels. The Sensex was up by 443 points. Among sectors, the Financial Services index outperformed, rallying 1.63 percent, whereas profit booking was seen in the Oil & Gas sector, leading the Oil & Gas index down by 1.11 per cent.

Technically, after an early morning intraday selloff, the market took support near 81,500 and bounced back sharply. From the day's lowest point, the market recovered over 700 points. A reversal intraday formation and a bullish candle near the 50-day SMA (Simple Moving Average) indicate that a pullback formation is likely to continue in the near future.

“For traders, 82,000 and 81,500 would act as key support zones,” says says Shrikant Chouhan, Head - Equity Research, Kotak Securities

“For traders, 82,000 and 81,500 would act as key support zones,” says says Shrikant Chouhan, Head - Equity Research, Kotak Securities.

As long as the market is trading above 81,500, the pullback formation is likely to continue. On the higher side, the bounce back could extend up to the 20-day SMA or 82,800. Further upside may also continue, potentially lifting the market up to 83,000. On the flip side, a decline below 81,500 would make the uptrend vulnerable.

Stock Picks

Reliance Power (RPower)

Buy at ₹63 | Stop‑Loss ₹60 | Target ₹72

Reliance Power has broken above the ₹62–63 resistance zone on increasing volumes, signaling renewed buying interest after consolidation. The stock is trading above its 20‑day and 50‑day moving averages, confirming a positive shift in technical momentum. The Relative Strength Index (RSI) stands around 66, reflecting healthy upward momentum while still staying below overbought levels. A stable hold above ₹60 supports the formation of higher highs and lows. With bullish conditions intact, the stock is poised for an upside move toward ₹72 over the short term. Traders may consider initiating positions on dips, using ₹60 as a protective stop.

Paradeep Phosphate

Buy at ₹183 | Stop‑Loss ₹175 | Target ₹210

Paradeep Phosphate has decisively cleared its resistance at ₹180–183 with strong volume support, indicating renewed investor confidence in the fertilizer sector. The stock is trading above its 20‑day and 50‑day moving averages, reaffirming its bullish technical structure. The RSI is near 67, showing solid momentum without being overstretched. The chart pattern exhibits higher highs and lows, reinforcing the uptrend. As long as the stock maintains above ₹175, it appears well-positioned to target ₹210 in the near term. Traders may look to accumulate on minor pullbacks, keeping a key stop‑loss at ₹175 for risk control.

(Source_Riyank Arora Technical Analyst at Mehta Equities)

EoM.