Raja Venkatraman recommends three stocks for 26 May

The broader market also participated in the rally, with the Nifty Midcap index climbing 0.9% and the Smallcap index outperforming with a 1.4% rise. The session highlighted strong momentum in financials and autos, alongside resilience in energy and realty counters, which collectively lifted overall sentiment. Despite selective profit-taking in healthcare and IT names, the market closed firmly higher, signaling renewed investor confidence.

Outlook for Trading

When the market gapped up higher on Monday, on the back of a possible US-Iran deal and also the constant fuel of emotions that are running high as people are getting exhausted of the constant market gyrations. Looking at the overall trends we can expect the market to show some promise as the rally we would now expect is beginning to unfold. As trends begin to emerge to the upside once again, we need to see a pick up in the rally.

But those expectations came to nought as the prices pulled back, forming higher lows across the day. The trading, for most part, was quite dull and intraday moves too were quite stilted. As a result, we had some boring times in the market. In the last week article, we wrote, “The moves are too tentative as yet to be meaningful from the point of view of drawing any specific conclusions. So, at best, one can only state that the declines appear to be on hold”. This remains the case at the end of the current week as well as the market churns around the same zone while attempting to move higher. But those efforts are still quite listless.

Weakness in the Rupee continued as we did see the prices simmer down to 95, however the tension continues. The RBI’s dividend has an indirect and typically neutral-to-positive impact on the USDINR pair. By injecting massive domestic liquidity, it can theoretically put upward pressure on USDINR (weaker rupee); however, it primarily acts as a fiscal cushion, allowing the RBI to utilize its massive foreign exchange reserves to keep the currency stable. As stated earlier, a weak Rupee is most often accompanied by bearish or ranging market trends in equities. We are witnessing that right now.

Moving to the daily charts we find that the bearish pressure was absorbed remained suppressed and with the clear shift in bias ahead of monthly expiry we can expect that continued upmove above Mondays high is necessary to sustain the momentum. While we witnessed a very depressing May series, we need to see how the road ahead could bring in some clarity in the market as the cloud of uncertainty remains. With stock specific moves one needs to steer clear of the index till we get a closing above 24000 . The RSI has finally move above the neutral zone and could look to tread higher while awaiting some confirmation. Now, a move above 23800 and 24000 has occurred in a single session and this would definitely aid the revival agenda.

With the constant attention of the market continuing to be fixed on the data coming out of the US, we would be subjected to some knee-jerk reaction. Till our quarterly results are completed this state of affairs may persist.

Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.

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