Stock Market Recap: 25 February
The Sensex broke its five-day losing trend on Tuesday and ended slightly higher, primarily due to gains in financial and telecom stocks. However, the oil & gas and IT sectors continued to face downward pressure. The Nifty IT index struggled to find direction and ended the day flat. The market had opened cautiously as investors assessed the renewed global uncertainties surrounding US tariffs.
Global market sentiment remained negatively impacted as the trade war initiated by President Donald Trump and his renewed stance on tariffs against Canada and Mexico continue to haunt investors worldwide.
At close, the Sensex gained 147 points, or 0.2%, reaching 74,602, while the Nifty dropped 27 points, or 0.1% to 22,526. Despite the slight recovery, both indices remained nearly 14% below their record highs from late September and are headed for their fifth consecutive month of losses—the longest streak since 1996. On the NSE, 958 stocks gained and 1,642 declined.
Outlook for Trading
Currently, leveraged positions (long) are shed, and some shorts are also in place. The recent fall is heading towards 22400, which we highlighted as the next set of supports. At the moment, it’s advisable to trade light as the trends are not favouring the upward bias. Investors are much quicker to create fresh longs than fresh shorts, as a norm. The bears are firmly in control and are keeping the selling pressure in full steam.
With momentum witnessing a steady acceleration of the bearish trends, any intraday rally that we shall witness now could attract more sell-off on rallies to higher levels. Hence, any advances that emerge must be considered as a sell opportunity. With the ‘open interest’ data indicating further deepening of the oversold status, we should step back from bullish bias till we obtain some clarity.
The stock-specific approach can be continued and kept that way. With supports given away, the Nifty Daily chart shown below highlights the gap region around 22760 is acting as a resistance. Trends now show a fresh downward momentum and the possibility of a move below Friday’s low has now accelerated the decline. With the bearish trends clearly in control now the possibility of sell at current levels and on rally situation has emerged. As mentioned yesterday, the selling pressure continues to build as even large caps have started giving up.
Also Read: The stock market Squid Game: Who’s at risk, who gets hurt, and how to save your skin
View Full Image
Post the breach of 22800 support, this will now act as a resistance in the next few trading days. With a curtailed week in play, the trends are likely to be restricted. A possible pullback rally towards the 22,800 levels or the gap region can be considered an opportunity to initiate a selling opportunity.
Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman:
• Fiem Industries: Buy above ₹1,420, stop ₹1,395, target ₹1,550-1,580
This counter from the auto industry has now given a strong breakout above moving average bands, indicating that the revival emerging despite the market weakness spells some buying emerging at lower levels. Tuesday’s trading action highlights that the rise in prices is supported by volume and could now result in some revival. The RSI showing some firmness indicates that the trends are in a revival mode and could set some pace to the upside. Buy.
View Full Image
• Nath Bio-Genes: Buy at ₹161, stop ₹156 target ₹171
This counter after the recent capitulation indicating some steady buying interest developing at lower levels as the supports offered by the lower bounds of RSI clearly spells out that the trends are showing some revival again. With the possibility of some upward bounce emerging one can consider going long as there is room to the upside.
• Star Cement: Buy above ₹215, stop ₹209, target ₹225-231
Star Cement, an Indian cement company, has seen some reasonable uptick after Ultratech has taken a controlling stake and has seen some steady upside. The last few days highlight that the prices have been holding their nerve as the trends are hinting at some bullish bias. With the ADX DMI (average directional movement index) showing a pullback one can consider that the trends are showing a potential to move higher.
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.
Also Read: Fresh bear hug could drag the market down to 22,500
