The Indian equity market experienced a phase of consolidation and rangebound trading on 1st August, resulting in a decline. Market experts predict this consolidation to persist in the upcoming trading sessions. However, there is a possibility of an increase in the rally if the Nifty manages to breach the 19887 level. Conversely, if Nifty falls below 19500, the decline may intensify.
On 1st August, the BSE Sensex closed nearly 70 points lower at 66459, while the Nifty 50 index ended 20 points down at 19734, forming a bearish candlestick pattern on the daily chart.
Bank Nifty Declines, Nifty IT Outperforms in Recent Session
Despite the market weakness, the breadth remained positive as two-thirds of the stocks rose compared to one-third that fell. This led to gains in the Nifty Midcap 100 and Smallcap 100 indices, which rose by 0.03% and 0.7%, respectively.
In the same session, the Bank Nifty declined by approximately 60 points, closing at 45,593, while Nifty IT outperformed, closing at 30289, up by 360 points or 1.2%.
Watch Out: Nifty Falls Below 19500, Intensifying Decline
Stocks like Indian Railway Finance Corporation, Affle India, and Coal India showed strong action in the trading session. Indian Railway Finance Corporation continued its uptrend, closing at a record high of Rs 40.50, up 6%, with significant trading volume. Affle India rallied 6% to Rs 1,139 and appeared to form a long bullish candlestick pattern on the daily chart with a substantial increase in volumes, breaking the downward resistance trendline and trading above key moving averages. Coal India also saw a breakout from the downward resistance trendline and registered a strong bullish candlestick pattern on the daily scale, surging nearly 5% to Rs 240.
Market Analysis: BSE Sensex and Nifty 50 Performance on 1st August
In particular, Coal India has been displaying a bullish trend since January 2022, marked by higher highs and higher lows. Despite price and time correction from November 2022, the stock recently rallied with robust volumes, reaching its highest level for the month. However, it currently faces resistance from the downward sloping trendline at Rs 242 levels. A successful breakthrough of this resistance could trigger further upside momentum, presenting new opportunities for traders and investors.
Positive Market Breadth: Stocks Rising Amid Weakness
Indian Railway Finance Corporation, which made its debut in 2021, has been on an upward trajectory, gaining momentum since November 2022. The stock is currently witnessing price and time correction near the Rs 36 level, but recently managed to break this resistance with strong volumes. The price action is forming a cup and handle pattern, a bullish sign, indicating a possible upside move till Rs 47-49. The trend decider level is at Rs 38, and a sustained hold above this level may lead to further gains, while a slip below it may signal weakness.
Gains in Nifty Midcap 100 and Smallcap 100 Indices
Affle India, in the IT sector, has faced challenging times since January 2022, displaying lower highs and lower lows. However, a recent consolidation near Rs 900 level formed an “inverse head and shoulders” pattern, indicating a bullish reversal. The breakout from this pattern suggests further upside momentum, provided the stock sustains above Rs 1130 levels. Investors should be cautious of a potential pullback and monitor the stock’s performance closely. The target price based on the pattern is Rs 1360-1400, with support visible at Rs. 1110.
