Stock Market News: At the beginning of Wednesday's trading session, the domestic benchmark indices, Sensex and Nifty 50, followed the weak global trend and started lower, with both indices opening in negative territory.
The Nifty 50 index dropped by 0.75%, or 189 points, opening at 25,089.95 points, while the Sensex opened with a loss of 703 points, down 0.85% at 81,851.82 points.
Global stock markets experienced downward pressure following the decline in US markets ahead of the Fed rate cuts, falling by over 2% on Tuesday.
The chief investment strategist at Geojit Financial Services, Dr. V K Vijayakumar, said that September has often been an uncertain month for world markets. For the past four years, this has been the case. Based on preliminary patterns, it appears that this may also prove to be the case this year. Growth worries were the cause of yesterday's selloff in US markets. The notion of a gentle landing, which has supported the US mother market and subsequently other markets, appears to be under jeopardy due to signs that US manufacturing is contracting. There is now a tiny doubt regarding this situation.
Nifty 50 has been closing at record highs for the past 7 trading days, however the index is on a 14 day consecutive green closing which is a record not seen in past 17 years. Last such consecutive run up was seen in October 2007. A caution with strict trailing stock loss is advised for leveraged longs at these levels on Nifty 50. Tuesday’s session had an inside bar formation wherein the index traded within its previous day’s range. Support continues to remain sub 24,950 and hence any dips near 25,100 are likely to allow a good risk reward entry for fresh longs for target of 25,420/25,550.
Bank Nifty on the contrary had an outside bar formation wherein both of its high and lows in Tuesday’s session breached its previous day’s high and lows allowing a 1 month high closing on the index. Structurally, for a trade at CMP, Bank Nifty offers better risk reward than Nifty 50 and is giving signs of outperformance going forward. 52,100 / 52,450 on the upside remains open for now with 51,200 odd acting as support levels for the ongoing base on the index.
On top stock recommendations for Wednesday, Sagar Doshi has recommended three stocks:
REC Ltd has given a fresh breakout of the consolidation pattern in the daily charts. Higher high retest confirms strong move likely to unfold. Momentum continues to remain strong on the stock with medium term outlook on charts showing a fresh upside.
Double Inside bar breakout on monthly chart suggest new momentum to lead prices higher. Daily chart also showing falling trendline breakout with strong volume . Equal weighted mid Cement index showing momentum whereas Prism Johnson leading pack suggesting new rally to unfold.
L&T Finance Ltd (BUY): LCP : ₹172; Stop Loss : ₹164; Target Price : ₹190
Post major Breakout in NBFC stock LTF showing sign of reversal . Taken a support at 50 DMA on weekly chart and formed reversal pattern. momentum likely to continue to 190.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
