We have seen consolidation and rangebound trade for the equity markets which resulted in a closing with moderate losses on August 1. Experts expect this ongoing consolidation to continue in coming sessions, too, which can be negated by 19,887 for the upward journey and 19,500 for the southward move.
The BSE Sensex dropped nearly 70 points to 66,459, while the Nifty50 fell 20 points to 19,734 and formed a bearish candlestick pattern on the daily scale.
However, the breadth remained positive with a 3:2 ratio, which helped the broader markets close positive. The Nifty Midcap 100 and Smallcap 100 indices gained 0.03 percent and 0.7 percent respectively.
The Bank Nifty also traded lower, falling nearly 60 points to 45,593, whereas the Nifty IT outperformed and was the star performer among key sectors, rising 360 points or 1.2 percent to 30,289.
Stocks that performed better than broader markets included Indian Railway Finance Corporation, Affle India, and Coal India. Indian Railway Finance Corporation has extended its upward journey for yet another session after a breakout of the horizontal resistance trendline in the previous session, rising 6 percent to end at a record closing high of Rs 40.50, with significantly higher volumes.
Affle India also gained 6 percent at Rs 1,139 and formed a long bullish candlestick pattern on the daily charts with a multi-fold jump in volumes after a breakout of the falling resistance trendline. The stock traded above all key moving averages (21, 50 and 200-day EMA - exponential moving average).
Coal India has also seen a breakout of the falling resistance trendline and formed a robust bullish candlestick pattern on the daily scale, while the volumes remained strong for the second consecutive session. The stock jumped nearly 5 percent to Rs 240.
Here's what Viraj Vyas of Ashika Stock Broking recommends investors should do with these stocks when the market resumes trading today:
Since January 2022, this particular stock has been exhibiting a bullish trend with higher highs and higher lows. However, starting in November 2022, it went through a period of consolidation both in terms of time and price. Despite this, the stock has seen a recent surge with strong volume participation, reaching a one-month high.
Currently, the stock is encountering immediate resistance from a downward sloping trendline situated at Rs 242 level. Once it successfully breaks above this resistance, market participants are anticipating a more pronounced upmove for the stock. This breakout could potentially lead to further bullish momentum and offer new opportunities for investors and traders alike.
It is essential for investors to closely monitor the stock's price action and volume patterns, as a successful breach of the resistance trendline may signal a shift towards further upward movement.
Indian Railway Finance Corporation
This company made its market debut in 2021, but it has been unable to generate significant returns for both investors and traders. However, there has been a notable development in the stock's performance since November 2022, as it experienced a breakout from a swing high level. This triggered a robust impulsive move, propelling the stock from Rs 24 to Rs 37 levels in a short span.
Following the surge, the stock has undergone a period of consolidation, both in terms of time and price, with a notable resistance at Rs 36-level. Recently, the stock managed to break above this resistance, bolstered by strong volumes, and has sustained the upward momentum.
From a technical perspective, the stock's price action is resembling a "Cup and Handle" pattern, which is considered a bullish signal. This pattern implies a potential price target of Rs 47-49.
For investors keen on capitalizing on this move, it is important to closely monitor the stock's performance around Rs 38-level, as a failure to hold this level might diminish the pattern's effectiveness.
The stock belongs to the IT sector, which has been facing challenging times recently. Since January 2022, the stock has been experiencing a series of lower highs and lower lows. However, in December, it found some stability around Rs 900-level and has been consolidating effectively.
Interestingly, this consolidation has taken the shape of an "Inverse Head & Shoulder" pattern, which is considered a bullish reversal pattern. The stock successfully broke out from this pattern, indicating a potential uptrend. Sustaining above Rs 1,130-level would further strengthen the stock's outlook.
However, it's worth noting that such patterns are prone to pullbacks, so investors should remain cautious. According to the pattern, the stock has a price objective of Rs 1,360-1,400, suggesting potential further gains.
On the downside, the key support is identified at Rs 1,110, which is crucial for the stock's continued positive momentum. Given the volatile nature of the IT sector, it is advisable for investors to exercise caution and closely monitor the stock's performance.
Patterns and price objectives are helpful tools, but market conditions can change rapidly, necessitating constant vigilance and risk management.
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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