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Sensex in strong reversal formation

The Indian benchmarks on Wednesday started on positive note amid positive global cues. There will be some cautiousness as Omicron variant of Covid-19 adds new uncertainties to the global economic outlook.

Indian equities open negative; Sensex, Nifty indices down 1.5% each
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Indian equities open negative; Sensex, Nifty indices down 1.5% each

Stock Picks

- BEML: Above Rs1,863 with a target of Rs1,881 and Stop loss of Rs1,845. The stock is in upward trending channel and has given the breakout.

- ABCAPITAL: Above Rs109 with a target of Rs111 and Stop loss of Rs107. It has support of 8 and 40 EMA.

- AFFLE: Above Rs1,152 with a target of Rs1,163 and Stop loss of Rs1,141. The stock is in upward trending channel and is on the verge of a breakout.

- METROPOLIS: Above Rs3,281 with a target of Rs3,313 and Stop loss of Rs3,249. It has a support of 8 EMA.

- MOTILALOFS: Above Rs946 with a target of Rs955 and Stop loss of Rs937. It has reversed from the support of 8 EMA.

(Source-CapitalVia)

Mumbai: The Indian benchmarks on Wednesday started on positive note amid positive global cues. There will be some cautiousness as Omicron variant of Covid-19 adds new uncertainties to the global economic outlook. Support may come as India ratings expects the economy to grow 8.3 per cent in Q2 and close the year with 9.4 percent in FY22. There may be some reaction in aviation industry stocks as the government said investments worth Rs 91,000 crore will be made for developing existing and new airports in different parts of the nation.

The BSE Sensex down by 195 points, Metals, Energy and Auto stocks witnessed sharp profit booking at higher levels. On Tuesday, after a positive opening the index quickly surpassed the yesterday's high and rallied over 900 points, but once again bears took the charge at higher levels and due to profit booking at higher levels the index corrected sharply.

The Sensex corrected over 1300 points from the day highest level. After a volatile trading session, finally it closed below 57,150 mark which is broadly negative for the market. Technically, the index has formed strong reversal formation with bearish candle, which indicates further weakness from current levels.

The index also maintained lower top formation that also supports short-term weakness. For the day traders, now 57,150 and 57,300 would be the key resistance level, above the same we can expect one more pullback rally up to 57,600-57,800 on the flip side, as long as the index is trading below 57,150 the index could continue its weak formation till 56,800-56,500.

"The texture of the market is extremely volatile hence level-based trading with strict stop losses would be the ideal approach for the traders," says Shrikant Chauhan, head of equity research (Retail),

Kotak Securities. We witnessed some volatile movements in the market and an attempt to hold the market above the support level of 57,300. Our research suggests that sustaining above 57,300 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 57,300, we can witness a positive momentum in the market which can lead to the levels of 58,200. We have observed the momentum indicators like RSI and MACD indicating early signs of reversal in the market," another analyst said.

Kumud Das
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