The markets erased most of the weekly gains on Friday last week thanks to Infosys. The second largest component of the Sensex by weight almost dragged down the Sensex when it fell 10% on the back of performance below expectations and the resigning of two key persons from the management. The IT index fell by 6.5%
Post Infosys, the markets would now be expected to consolidate.
Technically, the sensex should consolidate in the triangular channel of 19005 – 19791 as seen in the chart. Major resistance lies on the top and decent support (200 DMA, trendline support etc.) lies at the lower end. Interestingly the band is the retracement zone of the 23-38% from the highs of November.
Individually the following stocks are likely to give breakouts / in the short term which can provide a decent trade. Refer to the entry / target and stoploss specifics within the charts.
Pidilite Inds.
Pidilite broke out of the downward sloping trendline (just like ITC did a few days back).
The strong RSI, Stochs and the huge volumes on Friday all point to a breakout that will sustain.
SRF Ltd
A few weeks back, this one had given a huge breakout (as can be seen from the chart). Since then the stock has been consolidating in the formation of a classic pennant formation.
A breakout from here can give a trade of 25-28 points.
REI Agro
The stock finds good support every time it approaches the long support trendline.
A divergence with the RSI indicates that the stock should find a strong support yet again.
IFCI Ltd
Started coverage on this one after a reader query J
It forms a channel formation. The interesting thing to note in this channel is that the volumes dipped each time the prices dipped and rose every time the prices rose which is a bullish indication. A breakout above will be bullish for the stock. Caution: the stock might see some profit bookings near 61 (if at all breakout happens). Putting a trailing stop would help.
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