Markets in a short term downtrend; sell Grasim, IRCTC to protect gains

Markets in a short term downtrend; sell Grasim, IRCTC to protect gains

By Subash Gangadharan

On the daily chart, we observe that Nifty has found resistance at the 50 day SMA, after recently breaking out of a downward sloping trend line, that has held down the highs of December 2022 and January 2023. The 14-day RSI has weakened too, indicating Nifty could correct more. With the Nifty now breaking the recent swing lows of 17,719, we expect the correction to continue that could take the Nifty towards the recent lows of 17,353. Any pullback rallies could find resistances at 17,657-17,773.

IRCTC is in a short term downtrend as it has been making lower tops and lower bottoms for the last few weeks. This week, the stock has broken its near term support and closed below the 20 day and 50 day SMA. This indicates that the downtrend looks set to continue. Technical indicators are giving negative signals as the stock is now trading below the 20 day and 50 day SMA. Momentum readings like the 14-day RSI too are in decline mode and not oversold, which implies potential for more downsides. We therefore expect the stock to correct further in the coming sessions. Sell between the 616-620 levels. CMP is 618.1. Stop loss is at 640 while downside target is at 590.

(Subash Gangadharan, Senior Technical and Derivative Analyst, HDFC Securities. Views are author’s own. Please consult your financial advisor before investing.)