Buy or sell stocks: A sharp wave of selling swept through the Indian stock market, pulling the benchmark indices down by around 1 per cent each, on Friday. The Sensex tumbled 765 points, or 0.95 per cent, to settle at 79,857.79, while the Nifty 50 declined 233 points, or 0.95 per cent, to end at 24,363.30. Among broader market indices, the BSE Midcap index fell 1.56 per cent, and the Smallcap index slipped 1.03 per cent.
Stock market next week
Sumeet Bagadia, Executive Director at Choice Broking, believes that investor sentiment in the Indian stock market has weakened, with the Nifty 50 falling decisively below the 24,500 mark and now finding support near its 200-day exponential moving average (200-DEMA) around 24,000.
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Speaking on the outlook of the Nifty 50 index, Sumeet Bagadia said, “ The Indian stock market sentiment has turned weak as the Nifty 50 index has slipped below 24,500 decisively and the 50-stock index has now made its base around its 200-DEMA support at 24,000. On the upper side 24,550 is expected to work as immediate hurdle.”
Sumeet Bagadia’s stock recommendations
The Choice Broking expert suggested investors look at stocks that look strong on the technical chart and recommended buying Dr Reddy’s Laboratories, HDFC Life Insurance Company, and NTPC next week.
1] Dr Reddy’s Laboratories: Buy at ₹1211.40, Target ₹1330, Stop Loss ₹1150.
DRREDDY is currently trading at ₹1,211.40, having seen some profit booking from its recent swing highs. After this corrective phase, the stock has approached a key support zone around the 61.8% Fibonacci Retracement level, which is widely viewed as a crucial level for potential reversals during downtrends. Encouragingly, the stock is now showing early signs of recovery from this area, indicating buying interest at lower levels.
Technically, DRREDDY is approaching all its key moving averages, short-term, medium-term, and long-term, which now lie just above the current market price. If the stock manages to sustain a move above ₹1,230, it could signal a shift in momentum and open the path for a bounce back toward its recent swing high levels.
On the momentum front, the Relative Strength Index (RSI) is currently at 37.43. It has started to turn upward after reaching oversold levels, suggesting a potential reversal in trend and improving strength. This uptick in RSI supports the idea that downside pressure may be easing, and buyers are gradually stepping in.
Given this alignment of technical factors, the Fibonacci support zone, approaching key moving averages, and an improving RSI, traders may consider entering DRREDDY at the current price of ₹1,211.40, with a stop-loss set at ₹1,150 to manage downside risk. A sustained breakout above ₹1,230 could trigger a move toward ₹1,330 in the short to medium term, offering an attractive risk-reward ratio for positional trades.
2] HDFC Life Insurance Company: Buy at ₹761.55, Target ₹825, Stop Loss ₹730.
HDFCLIFE is currently trading at ₹761.55 and remains in a strong long-term uptrend. After hitting a record high recently, the stock underwent a healthy retracement, pulling back towards its demand zones, where it found support. This phase of correction has led to the formation of key bullish technical patterns on the daily chart—namely, a Descending Triangle and a Double Bottom pattern—both of which typically indicate potential trend continuation or reversal setups.
Recently, the stock has given a breakout from the Descending Triangle pattern, signaling a potential resumption of its broader uptrend. This breakout, coupled with a higher low structure, reinforces the bullish sentiment building in the counter. A sustained move above ₹775 would act as strong confirmation of strength and could lead to a further upmove, taking the stock toward higher levels.
Momentum-wise, the Relative Strength Index (RSI) is at 51.64 and is now trending upward after a recent positive crossover. This momentum shift supports the bullish price action and indicates growing buyer interest.
From a moving average perspective, HDFCLIFE has now crossed back above its short-term and medium-term EMAs, and is currently trading above all its key moving averages, a sign of improving trend strength and buying conviction.
Given the bullish chart structure, improving momentum indicators, and the breakout confirmation, traders may consider buying HDFCLIFE at the current price of ₹761.55, with a stop-loss at ₹730. A sustained move above ₹775 could trigger a rally toward ₹825 in the short to medium term, offering a favorable risk-reward setup.
Also Read | Five midcap stocks that have seen a sharp drop in FII ownership in Q13] NTPC: Buy at ₹334.75, Target ₹365, Stop Loss ₹320.
NTPC is currently trading at ₹334.75, and after witnessing a sharp decline of nearly 34% from its recent highs, the stock has entered a consolidation phase. This consolidation has been taking place in a defined range and has helped stabilize the price action, indicating reduced selling pressure and potential base formation. On the daily timeframe, NTPC is forming a Descending Triangle pattern, a commonly observed setup that often leads to a directional breakout when confirmed.
The stock is currently hovering near the breakout zone of this triangle pattern and is showing signs of strength. A sustained move above ₹345 would confirm the breakout, potentially paving the way for a renewed uptrend and further upside in the near term.
From a momentum perspective, the Relative Strength Index (RSI) stands at 48.04 and has recently given a positive crossover, suggesting improving strength and rising bullish sentiment. This shift in momentum aligns well with the price action setup and strengthens the breakout view.
NTPC is also trading near its short-term and medium-term EMAs, and if it manages to move above and hold these levels, it could soon test its long-term EMA. A firm hold above that would further validate the strength of the breakout and confirm trend reversal.
Given the chart structure, strengthening RSI, and proximity to key moving averages, traders may consider buying NTPC at the current price of ₹334.75, with a stop-loss at ₹320. A successful breakout could lead to an upside move toward ₹365 in the short to medium term.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.