Market action could shift to small and mid-caps now

Special to Firstpost

S&P CNX Nifty (5,485.80): After displaying a firm trend in the early part of the week, the index drifted lower in the latter half. The technical indicators do not provide convincing clues for us to get a directional bias.

The index could see an upward move if it sustains itself above the short-term support level of 5,440. The rally would, however, gain momentum only on a move past the resistance at 5,605.

On the contrary, a fall below the major support level of 5,300 would lend momentum to the downtrend. The recent range-bound price action would continue until the index moves either past 5,605 or falls below 5,300.

[caption id=“attachment_23864” align=“alignleft” width=“380” caption=“It would be a profitable strategy to hunt for trading opportunities in the small and mid-cap segments rather than the index or their constituents. AFP”] [/caption]

BSE Sensex (18,268.54): The price action in the week to June 10 was devoid of any significant trend. This lacklustre action could continue until the index moves above the resistance at 18,363 or falls below the support at 17,780.

The market participants’ interest appears to have shifted from large-cap stocks to the small and mid-cap segment. It would, therefore, be a profitable strategy to hunt for trading opportunities in the small and mid-cap segments rather than the index or their constituents.

Whirlpool India Ltd (Rs 250.90):After a minor downward move, the chart pattern indicates that the stock has resumed its short-term uptrend. As highlighted in the attached chart, the recent downward correction was arrested at the crucial support of Rs 228.

The stock could now rally to the immediate resistance of Rs 270. A breakout past this resistance could trigger a rally to the second target-cum-resistance level of Rs 285. The stop-loss for long positions may be placed at Rs 224.

Divi’s Laboratories Ltd (Rs 784.45) The stock has been in an uptrend since March 1 and is trading just below the major resistance at Rs 795. The price action and pick-up in trading volumes over the past few days suggest that the stock could break out above the resistance at Rs 795 and head towards the target of Rs 950.

Long positions may be considered on a breakout past Rs 795, with a stop-loss at Rs 750. Traders willing to play the waiting game may get exit opportunities at Rs 1,050.

(The views and recommendations featured in this column are based on the technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and interest in the instruments featured in the column.)