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Volatility returned on Dalal Street after yesterday's sharp fall. The indices recovered from the lows of the day to close flat. The Nifty closed at 4,739 up 5 points, while the Sensex shut shop at 15,626 down 18 points.

“Technically, this sort of volatility shows that some change in trend could be expected. Today, there was a small gap between 4,609 and 4,630 that almost got filled up. Now, we are back at round about above 4,700. Hopefully, it indicates a change of trend. It is very difficult to say where the Nifty would close. But an attempt is being made to stay above the 13-day moving average, which is incidentally at 4,730. Broadly we are still in that huge range on the downside at about 4,530. The upside or the 200-day exponential moving average (DMA) is around 5,050 and the 200-day simple moving average is at 5,100. This is the range and the big decisive move or at least the intermediate trend would turn up if we trade conclusively for a couple of weeks above 5,100,” said E Mathew.

Technical Analyst E Mathew of Mathew Easow Fiscal Services and Sajiv Dhawan of JV Capital Services are negative on BHEL.

Here’s how E Mathew views the stocks on board:

E Mathew On BHEL:
It has broken down though it has happened on low volumes, which is not very encouraging. The 200-DMA is at about Rs 2,100. There is reasonable support now for this stock at about Rs 1,835. This sell-off must at least subside at about Rs 1,835 to maintain some sense of respectability. Otherwise, if it breaks the chart of Rs 1,835 zone, then the stock could hit lower down. But today’s fall should be taken with a slight pinch of salt because it is happening on low volumes.

Sajiv Dhawan on BHEL:
There is probably going to be some large institutional unwinding. Stocks like L&T and BHEL were the big drivers of the rally over the last couple of years. These are the stocks that one would relatively insulate and meet with some buying at lower levels. Still, the stock has relative to the market not fallen as badly. But if it falls another 5-10% and if there is no buying, then one will get more worried because these are stocks where we tell investors to invest. We would also buy as a client, probably to pick up slowly on further falls.

E Mathew on Axis Bank:
Axis Bank has gone into a big breakdown sort of a situation. Now, the last possible support zone was about Rs 735. Unfortunately, that is also broken. If this stock is somehow stable at about Rs 735, it would indicate that some support is there. If it goes below Rs 735, the possibility of it going down to as low as Rs 670 is pretty large.

For anyone who is holding a trading position in a stock like Axis bank, the stop loss would be triggered. If they have not come out of the position, then they could possibly see the stock drifting down to Rs 670.

E Mathew on HUL:
HUL is undoubtedly outperforming the Nifty. The stock is far above its 200-DMA which is very significant. The stock is now trading well above Rs 225. I wouldn't be surprised if this stock gradually goes to about Rs 248-250. This stock is going to be an important indicator of the market.

The day HUL starts sliding or the uptrend starts weakening, that could be an indication that people are now moving out of stocks like HUL and ITC and getting back into the frontline stocks. So, for any trader keeping track on the movement of HUL would be very important.

Disclosures: It is safe to assume that we may be discussing stocks/sectors in which we and our clients may be holding positions

Source: Moneycontrol.com