Stock picks of the day: Broader market undergoing secondary phase of correction

Last week’s price action resulted in a high wave candle on the weekly chart indicating profit booking amid elevated volatility. Over the past two weeks, the index has been consolidating at higher levels amid stock specific action after rallying by about 9 percent in the preceding three weeks.

We believe that the index is likely to continue with its ongoing healthy consolidation in the broad range of 12000–11600 in the coming weeks.

The Nifty is likely to form a higher base by cooling off from the overbought situation. Therefore, a temporary breather towards 11600 should be used as an incremental buying opportunity as we do not foresee the index breaching the exit poll session’s low placed around 11,600 levels anytime soon.

Structurally, an elongated up move along with shallow price correction signifies robust price structure that makes us believe the bias would remain positive as long as a key support threshold of 11600 is respected.