On Friday, Nifty November futures closed at 10,518, however, the index is trading below its max pain strike level of 10,600 for the first time in this series
After touching 200-DMA and 50-DMA (10,750) on the first day of the last week, the market witnessed selling pressure and indices closed in the ed for three consecutive days.
On Friday, Nifty November futures closed at 10,518, however, the index is trading below its max pain strike level of 10,600 for the first time in this series. This raises the possibility of the market taking support at the lower level and get close to the max pain level this week.
Moreover, RSI had given a breakout at 50 earlier and traded higher, which is a bullish sign. However, its pull back to 50 again can be used as buying opportunity till it sustains above 38 levels, which provides good risk-reward ratio too.
At the same time, the occurrence of one of the most important short-term moving average, 20-DMA is around 10,482. Nifty is trading above 20-DMA and support of strong trend line on lower time frame lies around 10,500 implies strong support on the lower side in a range of 10,480-10,500.
Looking at open interest (OI) data- highest OI in Put is seen at 10,000 strikes followed by 10,500 strikes whereas maximum Open Interest (OI) in Call is at 10,700. This suggests an immediate trading range of 10,500 and 10,700 and expiry day close around max pain strike of 10,600.
Banking index is trading around its 200-DMA that suggests strength on the lower level. Short-term trend is positive and immediate resistance is around 26,300 and support around 25,700.
IDFC: Buy | Buy around: Rs 40 |Target: Rs 48| Stop loss: Rs 36| Upside: 20 percent
Bargain hunting is seen at lower levels in the scrip from where it formed a strong base. Currently, it has given breakout from its inverted Head and Shoulder pattern with a decent volume.
It also took support from its 50-DMA while bouncing back on the upside. Indicator and oscillators also lending support to the price action. Traders can buy at Rs 40 for the target of Rs 48 while keeping a stop loss of Rs 36.
L&T Finance: Buy | Buy Above: Rs 138 |Target: Rs 163| Stop loss: Rs 122| Upside: 18 percent
The scrip took a sharp rebound on the upside after hitting the low of Rs 110 and started consolidating which turned in the formation of Cup and Handle on the daily chart.
But the breakout of this continuous pattern is expected above Rs 138 from where it will gain momentum northward. Currently, it formed a strong base near its 50-DMA which comes near Rs 130.
RSI and MACD are looking firm which indicates support at current levels. One can go long in L&T Finance above Rs 138 for the target of Rs 163 with a stop loss of Rs 122.
Dr Reddy's: Buy | Buy Around: Rs 2,600| Target: Rs 2,950| Stop loss: Rs 2,399| Upside: 13 percent
From last few days, the stock is consolidating in the congestion zone of Rs 2,670 on the higher side and Rs 2,332 on the lower side which has taken the form of inverted Head and Shoulder pattern. Breakout of this inverted H&S pattern will come above Rs 2,655 from where buying momentum will increase further on the higher side.
Moreover, MACD is trading in the positive territory which indicates strength on the upside. Furthermore, it is trading above all its important moving averages. Buy Dr Reddy around Rs 2,600 with a stop loss of Rs 2,399 for the target of Rs 2,950.
ZEE Entertainment: Buy | Buy Around: Rs 450|Target: Rs 500| Stop loss: Rs 417| Upside: 11 percent
Recently, the stock gave trendline breakout on the upside which suggests trend reversal on the daily chart. From last few days, it has been trading above its 20 and 50-DMA which indicates strength.
Formation of bullish belt hold while giving trend line breakout indicates stock can upsurge further higher. Buy Zee Ent around Rs 450 with a stop loss of Rs 417 for the target of Rs 500.
Exide Industries:Buy | Buy Around: Rs 250| Target: Rs 275| Stop loss: Rs 236| Upside: 10 percent
The stock has corrected from the peak of 304 and currently, it has shown signs of bottoming out around Rs 237. Formation of the double bottom on the daily chart shows positive moves on the upside.
Long bullish candle along with positive divergence in RSI on the daily chart is showing the possibility of bounceback further on the upside. As of now, the stock is taking support from the line of parity on the weekly chart. With decent volume participation witnessed, we recommend buy the scrip around Rs 250 for an upside target of Rs 275 with a stop loss of Rs 236.
The author is head - technical and derivative research at Narnolia Financial Advisors.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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