Decreased volatility suggests limited Nifty downside; 3 value picks that can return up to 15%

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26 Aug, 2025 12:21

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The benchmark Nifty snapped its two-day losing streak and ended higher on Tuesday with gains of over half a percent at 11,008.05. After making a cautious start, bulls tightened their grip on the Indian equity market and traded in fine fettle on fresh buying by bulls after a sharp drop on crude oil prices, strengthening dollar-rupee and optimism over better Q1 earnings.

The Nifty is continuously trading above its 76.8 percent retracement level (January to March 2018 downfall), which indicates that it has the potential to move higher around 11,171 levels (lifetime high touched in January) with an immediate support at 10,890 (76.8 percent retracement levels of January to March downfall) and 10,849 (20-day exponential moving average).

The relative strength index (RSI) is trading at 63.04, showing positive movement. The moving average convergence divergence (MACD) is trading above the zero line with a positive crossover, which indicates that the bias could remain positive in the short term. The volatility index ended down 0.95 percent at 12.82. A decrease in VIX suggests limited downside and a consolidated upmove in the market.

On the options front, maximum call open interest of 35.72 lakh contracts is seen at strike price 11,000, followed by 11,200, which now holds 32.25 lakh contracts. Maximum put open interest of 48.76 lakh contracts is seen at 10,600 strike, followed by 10,800, which now holds 46.93 lakh contracts.

As per options data, support for the Nifty has shifted higher in the July expiry compared to last week. Immediate support is seen around 10,800 and 10,600 levels, whereas 11,200 will act as stiff resistance.

After making a marginal consolidation, the stock has given a breakout above Rs 385-386 levels on last Friday with higher volumes. The daily Relative strength index (RSI) is making the higher bottom and higher top and MACD is trading below zero line with a positive crossover whereas OBV — On Balance Volume is showing an upward momentum, which indicates that the stock has the potential to move higher.

Traders can buy the stock in the range of Rs 389-393 with a stop loss below Rs 374 (closing) for the target of Rs 429.

The stock has given a close below its 76.8 percent retracement level of April 4 to April 19, 2018 up move around Rs 215.60 on Monday with moderate volumes, which indicates that the bias could remain bearish for the next few trading sessions. The Daily Relative strength index (RSI) is trading at 44.28, in neutral zone and MACD continuously trading below the signal line whereas directional movement suggests limited upside.

Based on the above observations the stock is likely to move down in the near term. Trader can sell the stock after some technical bounce back around Rs 220-223 with a stop loss above Rs 228 (closing basis) for a target of Rs 208

After a decent correction from its 52 week highs, the stock has surged strongly from last three weeks and making Three White Soldiers pattern in weekly scale with moderate volumes. In weekly scale, Relative strength index (RSI) showing positive momentum and stochastic trading around over-sold zone with positive crossover, which indicates limited downside for the stock.

Based on the above observations traders can buy the stock at around current level and add on dips around Rs 264-266 with a stop loss below Rs 254 (closing) for the target of Rs 318.

Disclaimer: The author is Research Analyst at Guiness Securities. 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.