Analysts advise investors to remain cautious as a weakness could persist in the market as long as Nifty trades below 10660-10700 levels.
D-Street witnessed a smart recovery in the second half of the session on Monday but it failed to close above 10,700 levels. The index closed below its crucial short-term moving averages such as 5-EMA, 13-EMA as well as 50-EMA in a single session.
Auto stocks remained in focus on account of their monthly numbers with Tata Motors registering a 50 percent rise in sales along with Bajaj Auto registering a 65 percent rise in sales.
The weakness was seen in the broader market which witnessed cut of 0.7 percent. Nearly 300 stocks on the BSE hit a fresh 52-weeks low which includes names like Force Motors, Dalmia Bharat, Century Textiles, Apar Industries, Finolex Industries etc. among others.
Higher Crude prices and rupee depreciation continued to remain an overhang for the markets.
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Going forward, analysts advise investors to remain cautious as a weakness could persist in the market as long as Nifty trades below 10660-10700 levels.
A strong support is placed at 10,550 and near its 100-EMA placed around 10,575.
Traders should avoid short-term bets for time being and to focus on larger trends breach of which may chalk out the future course of action for the indices, suggest experts.
One the upside a decisive close above 10840 shall usher in a sustainable uptrend, they say.
Big News:
LIC and IDBI Bank deal is grabbing headlines
It turns out that employee unions in the insurance and banking sectors have written to the government against LIC's investment in IDBI Bank, arguing that the stake buy will not give any returns to the insurance company.
They also warned this could eventually lead to privatisation of the bank and resultant job losses.
Last Friday, the Insurance Regulatory and Development Authority of India (IRDAI) permitted Life Insurance Corporation of India (LIC) to increase stake in the ailing IDBI Bank from the current 10.8 percent to up to 51 percent.
The unions of both the insurance and banking industry have written to the finance ministry, and have asked other industry stakeholders, including Indian Banks Association, for support.
Another media report highlighted that LIC has lost money in 18 out of 21 PSBs in the last two and a half years.
Technical Outl0ok:
The index formed a bearish candle on the daily charts which also resembles a 'Dark Cloud Cover' kind of pattern on the daily charts.
The index closed below 13-EMA, 5-EMA, and 50-EMA but still maintained the crucial support which is 100-EMA at 10,575.
Formation of a Dark Cloud Cover after a bullish candle does not augur well for the bulls and traders should avoid short-term bets, for the time being, experts suggest.
Three levels: 10550, 10700, 10785
Max Call OI: 11000, 10800
Max Put OI: 10600, 10500
Stocks with high delivery percentage: Dish TV, HDFC, Wipro, ITC, TCS
34 stocks saw long buildup: ICICI Bank, Berger Paints, Apollo Hospitals, Hindustan Zinc
90 stocks saw a short build-up: Adani Enterprises, Jindal Steel, Hero MotoCorp, Torrent Power
Technical Recommendations:
We spoke to HDFC Securities and here’s what they have to recommend for intraday trading:
Sun Pharma: Buy| LTP: Rs 563 | Target: Rs 600 | Stop-loss Rs 545 | Return 7%
Tata Elxsi: Buy| LTP: Rs 1,344 | Target: Rs 1,425 | Stop-loss: Rs 1,300 | Return 6%
Shriram Transport Finance: Sell| LTP: Rs 1,286 | Target: Rs 1,180 | Stop-loss: Rs 1,365 | Return 8%
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