The Indian markets are directionless for more than a week now and closed the session on a flat note on August 22 despite global markets trading higher. Experts largely feel the rangebound trade in the 19,250-19,500 area is expected to continue in coming sessions and sustained closing on either side of the range can give further direction to the index going forward.
The Nifty50 gained 3 points to 19,397, and the BSE Sensex advanced by 4 points to 65,220, while the broader markets fared far better than the benchmarks, with the Nifty Midcap 100 and Smallcap 100 indices rising 1.1 percent and 0.8 percent, respectively.
We have seen consolidation in both the major sectoral indices. The Bank Nifty was down 9 points at 43,993, while the Nifty IT was down 35 t at 30,902.
Stocks that outperformed the broader markets with a strong price action included BHEL, Engineers India, and Tata Communications. BHEL surged 10 percent to Rs 111, the highest closing level since May 17, 2017, and formed robust bullish candlestick pattern on the daily charts with multi-fold jump in volumes. The stock has decisively broken small downward sloping resistance trendline, which is a positive sign.
Engineers India also hit a multi-year highs, rising 4.6 percent to Rs 159, and formed long bullish candlestick pattern on the daily scale with above average volumes. The stock has also seen a breakout of small downward sloping resistance trendline adjoining highs of August 1 and August 18.
Tata Communications climbed 4.6 percent to Rs 1,782 and formed strong bullish candlestick pattern on the daily timeframe with above average volumes. The stock sustained above all short-to-long term averages.
Here's what Viraj Vyas of Ashika Stock Broking recommends investors should do with these stocks when the market resumes trading today:
Exhibiting considerable momentum, the stock embarked on a robust upward trajectory, surging from around Rs 110 to approximately Rs 155-160 levels by July 2023. Subsequent to this impressive surge, the stock entered a consolidation phase, maintaining a relatively tight range between Rs 145 and Rs 155 levels.
This price pattern is reminiscent of a Flag and Pole formation, which typically signifies a brief pause before resuming the upward trend.
A sustained breakthrough above Rs 160 levels is anticipated to trigger a comparable surge in momentum, potentially propelling the stock towards the Rs 190-200 levels range.
Commencing from May 22nd, 2023, the stock experienced a robust and rapid uptrend extending until mid-June of the same year. Following this notable surge, the stock transitioned into a consolidation phase. During this consolidation, a pattern resembling a Flag and Pole formation emerged, suggesting a temporary pause before potential further gains. This pattern was effectively breached on July 26, 2023, accompanied by substantial trading volumes.
However, subsequent to encountering resistance around Rs 1,800 levels, the stock exhibited some vulnerability, leading to the initiation of a base formation above the 21-day exponential moving average (EMA).
Notably, the stock exhibited significant upward movement in the previous session, backed by robust trading volumes, indicating sustained buying interest. With a successful breakout above Rs 1,780 mark, it's anticipated that the stock may progress towards Rs 1,900-1,950 levels range.
After a slight correction in the first quarter of 2023, the stock initiated a noticeable surge in April of the same year. The stock's performance on the weekly timeframe highlights an ongoing trend of "higher highs" and "higher lows".
Over the past few weeks, the stock had been consolidating below Rs 104 levels. However, a significant development occurred yesterday when the stock impressively broke out from this range, facilitated by considerable trading volumes.
A noteworthy pattern emerging on the weekly scale is the formation of a "Rounding Bottom," a pattern that has gradually unfolded over a span of 5.5 years. Maintaining its position above the breakout level is a positive signal for the stock's prospects.
As the stock continues to exhibit strength, it is anticipated that it may target levels of Rs 122 and Rs 155 in the coming weeks.
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