Stock market today: Trade setup for Nifty 50 and Sensex today; four stocks to buy or sell on Tuesday - August 6

Stock market today: The Indian stock market indices crashed on Monday, August 5, due to fears of a potential US recession. The BSE Sensex crashed 2.74 per cent or 2,222.55 points, and the Nifty 50 plunged 2.68 per cent or 662.10 after Monday's trading session.

Wall Street also slumped on Monday, wiping off $1.93 trillion of investors' wealth. The Dow Jones Industrial Average declined 2.6%, the S&P 500 tanked 3.00%, and the Nasdaq Composite dropped 3.43%.

Trade Setup for Tuesday

On the outlook for Nifty today, Rajesh Bhosale, Equity Technical Analyst, Angel One noted that amid the broad-based sell-off, with the support levels breaking easily, the only relief came from prices holding near the 50 EMA (Exponential Moving Average) around 23,900. 

“However, given the strong bearish momentum, this support may be breached in the coming sessions. Traders are advised to avoid attempting to catch the bottom in the short term and should use any rebounds to reduce long positions. In this scenario, 24,250 is seen as immediate resistance, while overcoming the bearish gap left today between 24,350 and 24,700 would be a daunting task,” said Bhosale.

On the downside, he believes 23,900 followed by 23,600 (the 38.2% retracement of gains from the election day low) are immediate support levels. The key support would be around 23,400 - 23,300, aligning with the 89 EMA and the 50% retracement of the mentioned upmove. 

“Traders should monitor these levels and adjust their trades accordingly. One of the key highlights of the day was India Vix spiked by 42% to surpass the 20 mark, expect the Volatility to remain on the higher side, so it is advisable to manage risk carefully and stay informed about global developments, as they are likely to influence our markets in the near term,” said Bhosale.

Four stocks to buy or sell on Tuesday:

With regard to intraday stocks, stock market expert Sumeet Bagadia, Executive Director at Choice Broking, recommends the following four stocks to buy today: Hindustan Unilever, Tata Consumer Products, Huhtamaki, and Dr. Lal PathLabs.

1. Hindustan Unilever: Buy at ₹2,720, Target at ₹2,780, Stop loss at ₹2,680.

The expert said the stock has seen strong support at the price level of ₹2,680, technically retrenchment could be possible till ₹2,780, holding the support level of ₹2,680. This stock can bounce towards the level of ₹2,780 in the short term, so traders can go with a stop loss of ₹2,680 for the target price of ₹2,780.

2. Tata Consumer Products: Buy at ₹1,197, Target at 1,230, Stop loss at ₹1,180

The expert said that in the short-term trend analysis of the stock, a notable bullish reversal pattern has emerged. This technical pattern suggests the possibility of a temporary retracement in the stock's price, potentially reaching around ₹1,230. The stock is currently maintaining a crucial support level at ₹1,180. Given the current market price of ₹1,197, a buying opportunity is emerging. This suggests that investors might consider purchasing the stock at its current price, anticipating a rise towards the identified target of ₹1,230.

3. Huhtamaki India: Buy at ₹425.65, Target at ₹445, Stop loss at ₹410

Bagadia said Huhtamaki India is exhibiting strong bullish momentum, currently trading at an all-time high of ₹444 levels. The recent breakout above the crucial resistance at ₹410 levels is a significant technical development, supported by robust trading volumes, reinforcing the strength in the stock. The breakthrough suggests a potential continuation of the upward trend, offering an optimistic outlook for investors.

Additionally, Huhtamaki India is trading above key moving averages, including the short-term (20 Day), medium-term (50 Day), and long-term (200 Day) EMAs, further affirming its bullish stance. The momentum indicator, the Relative Strength Index (RSI), is at 69.59 levels, he said.

For traders, keeping an eye on the strong support near 410 levels is advisable, as a breach of this level could signal a shift in sentiment. Overall, Huhtamaki India's current technical setup suggests a favourable environment for further upside potential, provided traders and investors remain vigilant to potential reversals and closely monitor key support and resistance levels, said Bagaria.

4. Dr. Lal PathLabs: Buy at ₹3,160.15, Target at ₹3,310, Stop loss at ₹3,040

Dr. Lal PathLabs shares have recently exhibited a robust breakout from the critical resistance zone of ₹3,070 to ₹3,125 on the daily chart, consolidating the move with higher highs and higher lows. This breakout is supported by a notable increase in trading volume, indicating strong bullish sentiment, said Bagadia.

Key technical indicators, particularly the Relative Strength Index (RSI), emphasize the stock's positive momentum. The RSI not only signals positive trends but also aligns with the stock trading above crucial moving averages, including the 20-day, 50-day, and 200-day Exponential Moving Averages (EMA). This convergence underscores the sustained strength in Dr. Lal PathLabs price action, he said.

In summary, the decisive breakout, coupled with favourable volume and a positive alignment of key technical indicators, suggests a bullish outlook for Dr. Lal PathLabs. Traders and investors may find this analysis indicative of potential continued upward momentum in the stock, said Bagaria.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.