Indian Stock Market : On Tuesday, the Indian stock market witnessed a day of cautious trading with the key indices, Sensex and Nifty 50, ending the session on a flat note. The Sensex opened at 82,652.69, a slight increase from its previous close of 82,559.84. However, the index traded within a narrow range of approximately 274 points, closing marginally lower by 4 points at 82,555.44. This indicates a day of consolidation as investors appeared cautious ahead of key economic data releases.
The Nifty 50 started the session on a positive note with a gap-up opening. However, it failed to maintain the upward momentum, leading to profit booking. Despite this, the index managed to close the day almost flat at 25,280 levels. This performance is indicative of a market that is holding its ground despite selling pressure, a scenario that often precedes a potential breakout or continued consolidation.
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Indian Stock Market : Technical Analysis of Nifty 50
Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd, provided insights into the technical setup of the Nifty 50. According to Yedve, the index formed a small red candle on the daily chart, reflecting a slight weakness. However, it remains above the breakout point of a rounding bottom pattern, which suggests underlying strength. The 9-Day Exponential Moving Average (DEMA) and the recent breakout level are positioned near 25,070, making this a crucial support zone. Any dip towards this level is seen as a buying opportunity, with potential upside targets in the range of 25,500-25,600 in the near term.
Bank Nifty: A Closer Look
The Bank Nifty also experienced a mixed session. It began the day on a strong note but faced profit booking during the first half. However, strong buying interest emerged in the second half, helping the index close positively at 51,689 levels. On the technical front, the index formed a green candle with a long lower shadow, which is a bullish signal indicating strength. The 21-Day Exponential Moving Average (DEMA) at 51,060 serves as a critical support level. As long as the Bank Nifty remains above this level, a ‘buy on dips’ strategy is recommended. On the upside, the index may test the 52,000 level, aligning with the target of a double bottom pattern.
Stock Recommendations: Persistent Systems, ICICI Prudential Life, and Hindustan Petroleum Corporation
Persistent Systems:
Recommendation: Buy at ₹5,710 | Target Price: ₹5,600 | Stop Loss: ₹4,950
Persistent Systems is currently in an overall uptrend, holding its gains at higher levels. The stock has recently broken out of a seven-week consolidation range, forming a strong bullish candle on the weekly chart. The Average Directional Index (ADX) Indicator has turned upwards on both daily and weekly scales, indicating the strength of the ongoing uptrend. The IT sector, in general, is witnessing robust buying interest, and Persistent Systems is likely to outperform in the coming sessions. Therefore, it is recommended to buy the stock with a stop loss below ₹4,950 on a closing basis, aiming for a new lifetime high towards ₹5,600.
ICICI Prudential Life Insurance:
Recommendation: Buy at ₹5,710 | Target Price: ₹5,600 | Stop Loss: ₹4,950
ICICI Prudential Life Insurance is on the brink of a pole and flag breakout on the weekly chart after a six-week consolidation period, marking its highest weekly close. On the daily chart, the stock is consistently respecting its 20-Day Exponential Moving Average (DEMA), with its base gradually shifting higher. The insurance sector is witnessing strong buying interest, which could propel the stock to new highs. The Relative Strength Index (RSI), a momentum indicator, is also favorably positioned, supporting the uptrend. Given the overall bullish price structure, it is recommended to buy the stock with a stop loss below ₹715 on a closing basis, targeting a new lifetime high around ₹820.
Hindustan Petroleum Corporation (HPCL):
Recommendation: Buy at ₹416 | Target Price: ₹455 | Stop Loss: ₹395
Hindustan Petroleum Corporation (HPCL) is trading at its lifetime high and is in a strong uptrend across all time frames. The stock recently broke out of a 28-week consolidation range, forming a strong bullish candle on the weekly chart. On the daily chart, HPCL has been consistently forming higher lows, indicating a robust uptrend. The momentum indicator RSI is also moving higher, suggesting that the positive momentum is likely to continue in the coming sessions. Strong buying interest in Oil Marketing Companies (OMCs) further supports this view. Therefore, it is recommended to buy HPCL with a stop loss below ₹395 on a closing basis, aiming for a new lifetime high towards ₹455.
Conclusion
The Indian stock market is currently in a phase of consolidation, with key indices like Sensex and Nifty 50 showing resilience despite profit booking. The technical analysis suggests that while there is some short-term weakness, the overall trend remains positive. Investors are advised to adopt a ‘buy on dips’ strategy, particularly in stocks that are showing strong technical setups like Persistent Systems, ICICI Prudential Life Insurance, and Hindustan Petroleum Corporation.
As always, it is crucial for investors to maintain a disciplined approach, setting appropriate stop losses to manage risk while capitalizing on the potential upside in the current market environment.