Market Trading: Chemfab and Delhivery Among Top Picks After Monday’s Sharp Correction

On Monday, the Indian equity markets experienced a significant sell-off due to worldwide issues unsettling investor confidence. The Sensex collapsed by more than 2,200 points, while the Nifty fell over 3%, in what appeared to be one of the sharpest corrections we've seen in recent months. Some analysts in the market now say the 22,000 level for the Nifty is a critical short-term support.

The index remaining above this mark could mean a possible recovery towards the 22,500 to 22,600 range for the index. The reverse is true for a slip below 22,000; that could unleash more downside potential, with levels at 21,800 and 21,650 as possibilities. The same applies to the Sensex; it too has 72,400 as a key support level.

Chemfab: Breakout Points to Strength

49.09 | S&P BSE Metal 

Chemfab appears to have reason for optimism, say technical analysts who watch stock charts for clues to future market behavior. They note the stock was recently able to push above a falling channel pattern on its daily price chart, and it did so with decent volume, indicating greater buyer interest. At last look, the Chemfab stock was trading at about Rs 796.

The breakout above the earlier resistance area of INR 762 has confirmed a change in sentiment. Moreover, the stock is supported nicely by its 20-day EMA (exponential moving average), which assures its bullish momentum. The Relative Strength Index (RSI) is moving higher, and the upside trend seems strong and intact. Experts say a reasonable and manageable near-term target for this stock is INR 860, with a stop loss at INR 762.

Delhivery: Accumulation Signals a Bullish Setup

Currently priced around INR 268, Delhivery shows signs of accumulation that many view as a precursor to a sustained uptrend. The stock has broken above a rectangular consolidation zone on the daily chart, a zone it had occupied since early September. It did this with a bullish candlestick and, more importantly, increased volume. This is pushing above what used to be resistance, and coming with the conditions you’d like to see if you were buying the stock.

Momentum might continue in the coming sessions, as technical indicators like the RSI are also showing an upward direction. Analysts have set a target of INR 295 for the near term, with a stop-loss recommendation of INR 255 should unfavorable conditions occur. The analysts in question cite a favorable setup and sentiment that has been markedly trending upward.

Strategy for Traders and Investors

In a broader volatile market, it is not advisable to chase oversold large-caps. Rather, it is better for traders to focus on well-structured technically sound set-ups. Even if some short-term often seen ups and downs may be part and parcel of the market, the risks associated with buying stocks that are Indian Chemfab and Delhivery, in which strong fundamentals are considered a plus, could offer better margin of risk-adjusted returns. Of these two stocks, Delhivery has decent momentum.

Until the market again demonstrates a sustained stability above critical support levels, the best likely to produce consistent outcomes could be called a cautious yet opportunistic approach.