The recent consolidation and decisive breakdowns in technical parameters have caused the momentum to turn in favour of bears. Therefore, traders need to be cautious with 21,800 being a key area for further direction in the Nifty 50. If the index breaks this level, then the selling pressure may extend to 21,700 and then to the 21,500 mark. However, in case of a rebound, experts predict that 22,000 is expected to be the immediate resistance for the index.
On March 19, the BSE Sensex plunged 736 points to 72,012, while the Nifty 50 slipped 238 points to 21,817. This resulted in the formation of a long bearish candlestick pattern on the daily charts with above-average volumes. The broader markets were also down with the Nifty Midcap 100 and Smallcap 100 indices declining 1.2 percent each.
Stocks that bucked the market trend included RHI Magnesita India, Rainbow Children's Medicare, and Piramal Pharma. RHI Magnesita India rallied 3.5 percent on Tuesday to Rs 551.50 and formed a bullish candlestick pattern on the daily charts with above-average volumes. The stock traded higher for a fourth consecutive session with higher highs, and higher lows formation after consistently falling in the previous eight sessions, and climbed above the 10-day EMA (exponential moving average).
Rainbow Children's Medicare has seen several trend reversal patterns formation after significant correction and finally gained strength on Tuesday. The stock climbed 4.5 percent to Rs 1,178 and formed a bullish candlestick pattern on the daily timeframe with above-average volumes.
Piramal Pharma has negated lower highs formation seen in the previous 11 consecutive sessions and saw gap up opening on Tuesday. The stock rose 3 percent to Rs 120 with strong volumes and formed a bullish candlestick pattern with a long upper shadow on the daily charts, indicating selling pressure at higher levels.
Here's what Riyank Arora of Mehta Equities recommends investors should do with these stocks when the market resumes trading today:
RHI Magnesita India (Sell)
The stock has experienced a significant breakdown below its recent swing low of Rs 570.55 on weekly charts. With the RSI (relative strength index - 14) hovering near 36.86 on the daily charts. Overall momentum continues to remain weak, and a selling strategy should be applied for the stock.
Any pullback towards Rs 570 to Rs 580 zone should be utilized as a selling opportunity on the stock with a set stop-loss of Rs 605, targeting potential levels of Rs 480 and Rs 450.
Rainbow Children's Medicare (Buy)
The stock has reached an important support level of Rs 1,100 on its daily charts. After sustained selling pressure over the last 15 days, the stock has finally found support near Rs 1,100 levels and witnessed some buying activity.
According to the Anchor-VWAP (volume-weighted average price), overhead resistance lies near Rs 1,290 and Rs 1,400 levels, while immediate support is positioned at Rs 1,140 mark.
Overall, with the RSI on daily charts nearing 47, up from 33 in the last few trading sessions, momentum is expected to gradually increase on the counter.
Piramal Pharma (Hold)
The stock has undergone a significant breakdown below its recent support level of Rs 120 on its daily charts. The overall structure remains positive as per the weekly charts, suggesting a strategy of buying on declines for the stock.
Any downward movement towards Rs 110 and Rs 105 levels should be viewed as a good buying opportunity with a set stop-loss below Rs 95 mark, targeting potential levels of Rs 130 and Rs 135. The RSI on daily charts, currently at 35, indicates low momentum and slightly oversold conditions.
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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