Shabbir Kayyumi Narnolia Financial Advisors
Nifty ended at record high levels on weekly basis on August 24 and as of now, there is no reversal seen in price pattern on the weekly chart. However, overbought level on oscillators is indicating some profit booking at upper levels.
Although Nifty traded lower in the last 2 trading days of the previous week, closing below 11,538 would be alarming for bulls, until then the upside move is intact. Lower time frame trend line breakout will be above 11,580 levels, which will push prices to higher levels.
Nifty's five-day close simple moving average (DMA) around 11,546, indicates the bull run is intact unless the index trades below it, nonetheless do not be surprised to see it trading near 11,700 levels soon.
Moreover, strong support is around 11,500 level which is a psychological mark and 11,494 is swing low too. A decisive break and close above 11,640 levels can inch Nifty forward to the next levels of 11,800 in expiry week.
Looking at derivative data, highest Open Interest (OI) in Put is seen around 11,000 strikes followed by 11,500 strikes with a marginal difference of only 1 lakh whereas maximum Open Interest (OI) in Call is around 11,600 levels, followed by 11,700.
Option data indicates an immediate trading range between 11,450 and 11,650 levels. Interestingly, Put writers were more active in shifting their strike rate from 11,400 to 11,500 levels, which shows the bullish tone for Nifty as well.
We expect sideways to a bullish movement for the coming session, within a range of 11,700 on higher side and 11,450 on the lower side, however, sector-specific action can also be seen.
On the other side, Nifty has to close below 11,365 levels which will lead correction to 11,230/11,150 levels. Bank Nifty in line with our view last week traded in a tight range of 27,700 and 28,300. We expect sideways to bullish movement in a range of 27,600-28,600. However, the possibility of trading to new life high cannot be ruled out and we could witness a volatile monthly expiry.
Trade Recommendation:
BHEL: Buy| Buy Range: Rs 78-80 | Target Rs 105 | Stop Loss Rs 64| Upside 30%
BHEL-Scrip has given falling channel breakout after giving short-term consolidation on the daily chart. From last few days, it has been trading above from all its important moving averages which is showing further impetus on the upside. On the weekly chart, long bull candle suggests further bullishness in coming sessions. Moreover, RSI has given trend line breakout and it is also sustaining above 9 days EMA which all giving cues for upside momentum. By looking at all these factors, trader and investor can buy this scrip at 80 with the stop loss 64 for the target of 105.
PTC India: Buy | Buy Range: Rs 85-87 | Target Rs 108 | Stop Loss Rs 77 | Upside 24%
PTC - It has confirmed the reversal from its current downtrend. It also has given bullish breakout above 20 DMA and 50 DMA and thereafter it is consolidating above these DMA’s since last few days. Inverted head and shoulder pattern is also indicating a positive move in the coming days. So some fresh buying is expected from the current levels in the short term. Therefore we recommend taking long position in the stock near 88 with a stop loss 77. Upside target is 108.
Bharat Electronics: Buy | Buy Range: Rs 115-117 | Target Rs 145 | Stop Loss Rs 102 | Upside 23%
The stock has witnessed a decent correction recently from the peak of 192 and now has shown an indication for the formation of Inverse H&S pattern where construction of right shoulder is going on. RSI has found support near oversold zone and has indicated a reversal to maintain a positive bias and has potential to rise further in the coming days. Stochastic is also looking firm lending support to price action. With the chart looking attractive and decent volume participation witnessed, we recommend a buy on the dip to 117 in this stock for an upside target of 145, keep a stop loss of 102.
Hindalco: Buy | Buy Range: Rs 220-222 | Target Rs 270 | Stop Loss Rs 195 | Upside 21%
Hindalco - After hitting the peak of 284, the stock slipped near 52 weeks low from where chances of developing of demand are higher and it has been trading in a range-bound zone of 210 and 230 marks. As of now, the formation of inverted Head & Shoulder is giving cues to accumulate this stock at lower levels.
Moreover, monthly parity is seen near 222 marks and breakout is expected above 228 marks. The RSI also has bounced from the oversold zone and currently, it has indicated a steep rise. As long as it sustains above 195, the possibility of moving on the upside is higher and it can hit our 270 with an ease.
Equitas Holdings: Buy | Buy Range: Rs 140-144 | Target Rs 170 | Stop Loss Rs 130| Upside 18%
Stock has bottomed out near the levels of 130-131 and has been forming cup and handle as being mother pattern on daily chart. Trendline and cup & handle breakout is expected above 147-150 zone. It has been showing upswing move towards channel resistance line from where the stock can give a breakout on the upside. The scrip has respected the uptrend line and prices have started running in the channel. Positive crossover in MACD histogram is also creating positive rhythm in the scrip. Sustainability of RSI above 50 adds the conviction of buying the scrip around 144 for the target of 165 and 175 with stop loss of 135 marks.
Disclaimer: The author is Head - Technical & Derivative Research at Narnolia Financial Advisors. The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
