The market reversed all its previous day's gains with the Nifty50 closing way below the 19,700 mark on July 27, the expiry day for monthly futures & options contracts, and formed a Bearish Engulfing candlestick pattern on the daily timeframe which is a bearish reversal pattern, but the breadth was not very weak. Hence, the possibility of further correction is likely, but it may not be a severe fall as the index may take support at the 19,500 mark, experts said.
The Nifty dropped 118 points to 19,660, and the BSE Sensex slipped 440 points to 66,267, while the Nifty Midcap 100 index outperformed frontliners, rising a third of a percent and Smallcap 100 index closed flat as about 1,045 shares declined against 968 advancing shares on the NSE.
The Bank Nifty50 was also caught in a bear trap, falling 383 points to 45,679 and forming a Bearish Engulfing candlestick pattern on the daily scale. At the same time, Nifty IT continued to consolidate this week after major tech companies' earnings, declining just 55 points to 29,745.
Stocks that bucked the trend included Syngene International, Poly Medicure, and Raymond. Syngene International has seen a consolidation range breakout and formed a long bullish candlestick pattern on the daily charts with robust volumes. The stock rallied nearly 6 percent to end at a record closing high of Rs 807, while on a monthly basis, it has seen an upward rally since February.
We have also seen a breakout of the consolidation range in Poly Medicure, which has formed a long bullish candlestick pattern on the daily scale with above-average volumes. The stock ended at fresh record closing high of Rs 1,222, rising 6.7 percent.
Raymond shares also hit a record closing high of Rs 1,918, rising over 6 percent. The stock has seen the formation of a long bullish candlestick pattern on the daily timeframe with strong volumes and made higher highs and higher lows formation for the second straight session.
Here's what Shrikant Chouhan of Kotak Securities recommends investors should do with these stocks when the market resumes trading today:
After the sharp upward rally, the stock went into consolidation mode, which resulted in the formation of a Flag chart pattern on the weekly scale. The recent breakout in the stock is representing a bullish continuation pattern which is signifying a new leg of up moves from the current levels.
For positional traders, Rs 1,170 would be the trend decider level. Trading above the same uptrend formation will continue till Rs 1,300. However, if it closes below Rs 1,170, traders may prefer to exit from trading long positions.
The counter is trading into a rising channel pattern constantly and forming the higher lows series. The strong bullish momentum on the weekly scale suggests that the counter is likely to maintain bullish continuation chart formation in the coming horizon.
As long as the stock is trading above Rs 1,850, the bullish formation is likely to continue. Above this, the counter could move up to Rs 2,050.
On the flip side, a fresh sell-off is possible only after the dismissal of Rs 1,850. Below the same, the stock could retest the level of Rs 1,800.
The stock has given a breakout of its Ascending Triangle chart pattern with a strong bullish candlestick. Additionally, on the daily charts, it has formed a higher bottom formation, hence the structure of the stock indicates the beginning of a new up move from the current levels.
For the traders, Rs 780 would be the key support level to watch out for. Above this the uptrend structure will continue until Rs 870.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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