Edited excerpts from a chat:
The sharp sell-off in the previous 3 sessions clearly upset the bulls who believed that the market may have made peace with war. How have your calculations changed in the last 3 days?Having come close to March’s peak a few days earlier, the uptrend had almost run its course, but we had hopes of extension in the uptrend through most part of last week. However, Friday’s downside gapped opening dismantled the bullish structure, opening room for 23500. That said, having retraced 68% of the upmove from 13 April to the month’s peak, a mean reversion upswing is likely, which could renew the prospects of upswing aiming 25000-25600. However, given the many resistances appearing shortly ahead, we would require a confirmation from a break past 24140. Else the downsides could persist.
IT index is suddenly the worst performer again with 10% weekly loss amid weaker than expected guidance given by software exporters. Will the bear play get stronger?The Nifty IT index has seen a sharp sell-off, emerging as the worst performer this week, but the current setup also hints at the possibility of a short-term bounce. Technically, the index has broken the daily Supertrend and witnessed a bearish MACD crossover, with the average RSI of constituents hovering near 40, reflecting weak but not oversold conditions. The weekly bearish Marubozu points to strong selling pressure; however, prices are trading close to last month’s support of 28,288. Derivative data adds an interesting layer with around 67% of near OTM call option strikes saw short addition, while nearly 80% of stock futures witnessed long unwinding on Friday and on a weekly basis, leaving room for either fresh shorts or pull-back. Additionally, with about 44% of stock options showing PCR OI below 0.5, the probability of a near-term pullback or relief bounce has increased, even as the broader bias remains cautious. However, a clear break below 28288 could open the door toward the next major support around 26,300, keeping the broader bias negative.
HCL Tech was among the worst losers last week. What should traders do this week?
HCL Technologies reflects acute sectoral weakness and stock-specific pressure. The trend remains decisively weak, with prices trading well below key averages and momentum indicators firmly bearish. The daily RSI has slipped below 25, indicating deeply oversold conditions, which raises the probability of a short-term technical pullback or relief bounce. Such a move could extend toward the 1,280-1,300 zone, which now acts as an immediate resistance area. However, this bounce, if it materialises, is likely to be corrective rather than trend changing. The broader structure continues to show lower tops and lower bottoms, and momentum remains negative. Traders should therefore adopt a cautious approach, using any pullback toward resistance to lighten long exposure or look for sell-on-rise opportunities, while keeping the overall bias negative in the week ahead.RIL shares would be in focus on Monday morning. Given that the stock is down around this year, what are the charts indicating for the week ahead?Two successive days of close below the 10 day SMA, projects weakness ahead. That said, recovery seen on Friday’s last hour encourages us to nurture upswing hopes, but we would require 1345-50 region to be convincingly broken to negate the overall negative view.Pharma stocks suddenly become a strong defensive play. How do you see the momentum in stocks like Piramal Pharma and DRL going forward?Yes, but that theme too has its limits. Both these stocks’ oscillators suggest overbought conditions. With both of them stalling near February’s peaks, it would be prudent to wait for pull backs to re enter.
Share your top trading ideas for the week ahead.
EPL (CMP: 226)View: BuyTarget: 338SL: 219
EPL has shown early signs of stabilization after the recent upmove, forming an inside-bar doji on the daily chart, which reflects temporary indecision after a slippage. Momentum remains constructive, with the RSI holding firm around 55, indicating underlying strength and no immediate loss of momentum. Importantly, the stock is trading above the monthly declining trendline, suggesting a potential shift from a corrective to a consolidation phase. As long as EPL holds above the 220, the bias remains positive with scope for a continuation move on a decisive breakout above the inside-bar range. However, traders should watch for confirmation through volume expansion. A breakdown below recent support would negate the setup, but for now, the technical structure favours a cautious positive outlook in the near term.
ONESOURCE (CMP: 1824)View: BuyTarget: 2030SL: 1680
ONESOURCE is showing a clear improvement in its technical structure, pointing to a positive outlook ahead. The stock has decisively broken above its long-term declining trendline, signalling a potential shift in the broader trend. On the weekly timeframe, EPL has also moved above the Supertrend level of 1690, indicating a transition from bearish to bullish territory. Adding to the strength, the stock has surpassed its 200 DMA at 1678 this week. Momentum indicators are supportive, reinforcing the bullish bias. As long as EPL sustains above these breakout levels, the setup favours continuation on the upside, with any short-term consolidation likely to be healthy.
