Stock market on 24 February
We wrote previously, “The failure of Nifty to close beyond 23,000 this week has triggered some panic.” The weakness currently being experienced is due to global economic conditions, which have led to continued volatility and uncertainty among retail investors, who typically have a lower tolerance for risk.
Additionally, weak consumer sentiment in the US and concerns about tariffs are expected to put more pressure on sectors that rely heavily on exports, such as information technology (IT). However, the pace of earnings downgrades is projected to slow down thanks to increased government spending, lower interest rates and tax reductions.
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Following an initial drop in early trading, the Nifty oscillated within a range before closing at 22,553.35, down 242.55 points. The fast-moving consumer goods (FMCG), automotive and pharmaceuticals sectors ended in the positive, while IT and metals saw a correction of more than 2%, making them the major laggards. Mid-cap and small-cap stocks largely mirrored the movement of the main index.
Outlook for trading
Despite repeated attempts to head higher, the market has been in steady decline of late. This has forced us to resort to some stock-specific actions.
As we enter the expiry week, the focus is now shifting to the rollover activity which will attract some buildup as anticipation of a recovery grows. We are through with the result season and the macro numbers that seemed to have played a part in the market’s decline.
The benchmark index may remain range-bound and the stop that we had set below 22,700 has now given way. Now, the Nifty daily chart shows the gap region around 22,760 will now act as a resistance level. The market has now witnessed fresh downward momentum and the possibility of a move below Friday’s low has accelerated the decline. If the bearishness persists, a drop to the lower end of the channel around 22,400 looks possible.
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The index has broken its strong support level of 22,800 after several attempts, which will serve as a resistance level moving forward. A possible pullback rally towards 22,800 can be anticipated, with immediate support now found at 22,400.
Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman
• KIRINDUS: Buy above ₹570, stop ₹555, target ₹610- ₹630
This specialty chemicals stock has now made a base around the MA Bands, indicating a revival despite the market’s weakness. Monday’s trading action shows that the rise in prices is supported by volume and could now result in a revival. With the RSI showing a positive divergence, the trends are in revival mode. Buy.
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• TEXINFRA: Buy above ₹102, stop ₹99, target ₹106-108
After a strong decline into oversold territory, the formation of long body candles shows the stock could now recover. We can expect a rally towards the Moving Average Bands as some bullish signatures and momentum readings are seen showing a revival from oversold zones. With a long body candle, one can look to go long for the next few days. Buy.
• KOTAK BANK: Buy at ₹1970, stop ₹1940 target ₹2150
This private banking stock has managed to stay afloat during the recent capitulation, indicating steady buying interest developing at lower levels. The support offered by the lower bounds of RSI clearly shows that the trends are showing signs of a revival. With the possibility of an upward bounce emerging, one could consider going long as there is room on the upside.
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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.