Nice recovery from the day's low in late trade helped the market sustain an uptrend for yet another session on September 6. The Nifty50 also maintained higher highs formation for four days in a row. Hence, the sustainability above 19,600 can drive the index towards 19,800, while the 19,500-19,400 can remain in a role of support for coming sessions, experts said.
The Nifty50 rose 36 points to 19,611, and the BSE Sensex advanced 100 points to 65,881, while the Nifty Midcap 100 and Smallcap 100 indices ended at fresh record closing highs, but with moderate gains as the market breadth was equal among bulls & bears.
The profit booking was also seen in major driving sectors. The Bank Nifty fell 123 points to 44,409, while the Nifty IT declined 53 points to 32,312 amid volatility.
Stocks that outperformed broader markets on September 6, included EID Parry, LIC of India, and KEC International. EID Parry has seen a good breakout of a long downward sloping resistance trendline adjoining highs of October 20 last year, and August 4 this year, with robust volumes, which is a positive sign. The stock moved above all key moving averages and closed with 8 percent gains at Rs 522, forming a strong bullish candlestick pattern on the daily charts.
Life Insurance Corporation of India also saw a decisive breakout of a long falling resistance trendline adjoining highs of December 20 last year, and August 11 this year. The stock has formed a bullish candlestick pattern with a long upper shadow on the daily charts with strong volumes and rose 2.7 percent to Rs 678.
KEC International has formed a bullish candlestick pattern that resembles a Bullish Harami on the daily charts, but the position is not right. Generally, the Bullish Harami, a bullish reversal pattern, forms at the end of a downtrend. However, the KEC stock is now near record-high levels after gaining 2.6 percent on September 6. It was trading at Rs 676.70 on the NSE and traded above all key moving averages.
Here's what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today:
Recently the said counter has taken support on flat Ichimoku Cloud by making Doji candles on a daily scale. In the previous trading session, we saw a nice reversal candle which confirmed a bullish reversal. Additionally, since the last 8 sessions, it is making base near the middle band of Bollinger band followed by band expansion which is looking lucrative.
From the indicator point of view, the RSI (relative strength index) daily is above 70 levels, the daily MACD (moving average convergence divergence) is showing strength along with daily directional movement index has given a positive crossover thus confirming bullish bias in the counter.
One can buy in the range of Rs 515-520, with an upside target of Rs 585 and stop-loss would be Rs 475 on a daily close basis.
LIC has very similar kind of setup that we saw above in EID Parry. LIC has been trading above the Ichimoku Cloud for a long time along with price action maintaining the middle band of the Bollinger band which is a positive sign for the counter.
From the Indicator point of view, the RSI daily has reversed from 50 levels, the daily MACD has formed a positive cross above the zero line along with daily directional movement index has been constantly positive for a long time thus confirming bullish bias in the counter.
One can buy in the range of Rs 675-680, with an upside target of Rs 725 and the stop-loss would be Rs 650 on a daily close basis.
Though the counter looks lucrative one needs to be cautious with KEC as it has already made one Bearish Engulfing candlesticks pattern weekly (refer to the chart). Also slowly and gradually it is making negative divergence on weekly RSI (price action making higher highs but RSI making lower highs).
At the current juncture, one can book profit in the zone of Rs 675-700. Fresh longs will only trigger once it gets a decisive closing above Rs 700 for a target of Rs 800 and the stop-loss would be Rs 655.
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