The recent volatility in the stock market has sparked concern among traders, particularly with the Nifty index retesting the crucial 22,800 support zone. However, amidst these fluctuating conditions, there is a silver lining for market participants: the possibility that the market might be nearing a bottom. If the Nifty breaks above the 23,400 mark, it could signal the beginning of a bullish rally, with optimism mounting among traders and investors.
Amid this volatile backdrop, specific sectors are showing signs of strength, and one sector that stands out is the Nifty Service Sector.
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The Nifty Service Sector is a diverse and crucial part of the Indian economy, encompassing various industries such as financial services, telecommunications, and IT services. With the market in flux, the service sector is poised for a potential reversal, presenting a potential opportunity for traders to position themselves.
Nifty Service Sector weekly chart
Source: Trade Point, Definedge Securities
A promising technical setup has emerged on the weekly chart of the Nifty Service Sector Index. The index has recently reversed from the 62-Week Exponential Moving Average (62WEMA) Channel, which has historically acted as a robust demand zone.
What is more encouraging is the behaviour of the King Oscillator, a proprietary indicator developed by Definedge. The King Oscillator has turned upward from the oversold zone, signalling a shift in momentum. The King Oscillator is derived from 14 key technical indicators, and its move from oversold conditions indicates that the momentum is shifting in favour of bulls.
Considering the historical significance of the 62WEMA Channel as a demand zone and the positive reversal in the King Oscillator, this could potentially be a prime time to accumulate stocks within the service sector.
Here are three service sector stocks you can add to your watchlist.
1. Bajaj Finance
Bajaj Finance, a leading player in the financial services space, has long been a favourite among investors due to its consistent growth and strong fundamentals.
Bajaj Finance weekly chart
Source: Trade Point, Definedge Securities
The stock has recently broken out of a 179-week consolidation pattern on the weekly chart.
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