Stock markets on 10 February
On 10 February, Indian markets experienced a significant decline of over 0.7%, mirroring losses across most Asian markets. There was a deterioration in investor sentiment as the trends turned cautious following US President Donald Trump’s commitment to imposing tariffs on imports, raising concerns over potential disruptions in global supply chains. The threat of US tariffs continued to weigh on market sentiment.
The allure of the BJP victory that the bullish camp hoped for could not help the market survive above 23,500 that we have been mentioning. The resultant decline that ensued has now once again forced investors to consider a shift to safer assets like gold amid caution towards riskier investments. On the earnings front, companies are facing downgrades in estimates due to a weak demand environment, margin pressure, and a cautious near-term outlook.
Outlook for trading
A major worrying factor that we encountered yesterday was the rupee sliding to an all-time low of 87.95 against the dollar in early trading, dropping sharply by 0.55%. However, buying interest emerged as the rupee approached the 88 mark, leading to a partial recovery towards 87.47 by mid-session. The continued outflow of funds post-budget and RBI policy weighed on sentiment, as neither event provided substantial reforms or structural shifts beyond higher tax slabs for retail and a minor rate cut from the RBI.
However, looking at the daily timeframe charts, we can conclude that the “Buy on Dip and Sell on Rally” market still firmly holds its grip on the market sentiment. Now, going into today, we are starting on a weak footing and would encounter some challenges around 23,500-23,600. With the lower levels having no meaningful supports, one can see the fall extend. For today, we can abandon the buy on dip strategy till we get a closing above 23,600. Also, the open interest data now shows that there is a change in guard and the lot of call writing around 23,500 levels is now indicating some pressure that could result in the bearish tones taking over.
The readings from the option data suggest that PCR has moved to 0.80, highlighting that the trends are witnessing sell-off at every rise. Like we mentioned, the combination of global tariff threats, cautious investor sentiment, and domestic economic challenges contributed to the sharp market decline and volatility in the rupee.
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Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman:
• Aarti Pharmalabs Ltd: Buy above ₹742 | Stop loss ₹725 | Target ₹825
After undergoing a lot of volatility, this pharma stock delivered stable Q3 results, and the inability of the bears to drag it lower in this uncertain market speaks well for a strong breakout as buying momentum was built. After biding some time and absorbing the volatility, we can look at the prices looking to extend next week. The steady upward bounce has pushed the RSI above 70 indicating the trends could sustain beyond the value area resistance around 700.
• Greenlam Industries Ltd: Buy above ₹590 | Stop loss ₹573 | Target ₹640
There has been some steady buying at lower levels as the momentum tried to revive the prices from lower levels. With the cloud region offering some upward thrust, the possibility of the counter showing a bullish bias has gone up. Now, the steady upward bias in the last few days managed to cross the Kumo region around 580 levels last week, highlighting some steady resolve to the way up. Buy.
• ICICI Prudential Life Insurance Co. Ltd: Sell below ₹587 | Stop loss ₹605 | Target ₹535
Financial services stocks are under pressure and the fall seen in the last session post the budget indicates that the bearish pressure could extend. The long body shown at the end of the decline on Monday beneath the resumption of downward pressure suggests that there is more decline possible. The attempt to move beneath the consolidation zone presents a strong case of bearishness. As the RSI is already showing weakness, the rally only stopped short at 40 levels, and if dipped below it again, we can look to trade short in this counter.
Raja Venkatraman is co-founder, NeoTrader.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
