The market fell over two and half per cent on Monday amid fears of inflation after US inflation data came more than expected ahead of Fed June announcements on interest rate hike. Nifty50 and Sensex declined by 2.6% each to close at 15,774 and 52,846 respectively.
Underperforming benchmark indices, Nifty midcap and smallcap ended lower by 2.8% and 3.8% as profit booking sharpened in midcap and smallcap stocks.
Sectorally, Nifty IT and Metal ended with cuts of 4.1% and 3.8% respectively. Banking and financial services were other sectors that witnessed multi-cornered profit booking as all other indices closed deep in the red on Monday.
“Globally, markets have turned weak on inflation fears. It is important to appreciate the fact that globally markets are highly integrated. The mother market, US, sets the trend and others follow. US markets are weak on worse-than-expected inflation (8.6% in May vs an expectation of 8.3%) and markets expect aggressive monetary tightening by the Fed,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
He said this is unfavourable to risky assets like equities. “Rising dollar and bond yields in US will force more selling by FPIs in India,” the expert added.
Meanwhile, even as the stock market ended with massive cuts on Monday, certain stocks came in focus. These were Minda Industries, RBL Bank and M&M Finance. Minda Industries closed with nearly three and half per cent gains, RBL Bank dropped over 22% and M&M Finance slipped over six per cent on Monday
Here is what Jatin Gohil, Technical Research Analyst at Reliance Securities, sugest investors should do with these stocks
Recommendation: BUY | Target: Rs1,090 | Stop Loss: Rs769 | Time Duration: 3-4 weeks
The stock again tested its extended horizontal trendline and resumed its up-move. In the past, the stock moved towards its 100-day SMA after testing that trendline. Its daily RSI reversed from its bull market support zone (33-40 levels) and given a buy signal.
We believe history will repeat itself, which could lead the stock towards its 100-day SMA initially and its highest level of Mar’22 subsequently. In case of any decline, the stock will find support between that horizontal trendline and prior swing low.
Recommendation: SELL | Target: Rs60 | Stop Loss: Rs102 | Time Duration: 3-4 Weeks
Post a Head and Shoulder breakdown, the stock remained in tremendous pressure. On 13th Jun’22, the stock extended loss violating its prior swing low of Rs101.55 and slipped to a record low of Rs86.35. The key technical indicators are negatively poised on the medium-term timeframe chart, while short-term indicators reversed from the threshold levels and given a sell signal.
As per the current set-up, further decline cannot be ruled out, which could drag the stock towards its pattern breakdown point of Rs60 (i.e.100 points down from its neckline). In case of a pullback, as per the change in polarity principle, its prior support will work as a resistance.
Recommendation: SELL | Target: Rs113 | Stop Loss: Rs187 | Time Duration: 3-4 Weeks
Since July19, the stock reversed multiple times after testing its 200-week SMA and witnessed a fall of 37%-69%. On week the ended 10th Jun’22, again the stock tested that moving average and resumed its down-move subsequently. The key technical indicators are in favor of the bears on weekly as well as daily timeframe charts. We believe the stock may witness identical fall after testing that moving average and may test lower levels. This could drag the stock towards its prior medium-term support zone initially and its lowest level of Sep’20. On the higher side, its 200-week SMA will continue to cap the up-move.