There is a mild hint of long unwinding seen from FII’s derivatives statistics for index futures, and any further acceleration in unwinding along with India VIX moving near lower band can induce volatility going forward, Navneet Daga, Senior Derivatives Analyst – Institutional Equities, YES Securities, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpt:
Q) Market saw consolidation last week but the good part is that there is a lot of buying support at lower levels. What led to the price action?
A) Indian markets saw a consolidation of gains during the week as headline index digested the large gains made in the past 2 weeks. Traders bracing for a tight band trade for Nifty between 15,000 to 15,300 mark moving into fag end of Feb expiry.
India VIX settled 5 percent lower at 22 mark as options writing picked up pace in sideways markets. The large-cap stock started to see near-term price exhaustion on the upside leading to consolidation of gains.
Q) Small & Midcaps also consolidated but overall they remain fairly stable in the week gone by. What led to the price action and any interesting stock charts you are seeing in the broader market space?
A) Midcaps outperforming as largecap consolidate. Well, a similar trend is visible in the US markets as the Smallcap 2000 index was rallying and outperforming benchmark indices. We expect the rally in mid & smallcap to continue in the domestic markets as traders hunt for yield and chase momentum.
Polycab India:
Midcaps continue to surge higher on cables and wire space. Polycab is trading near its upper band of resistance zone of Rs 1320-1340 zone, and any possible move above Rs 1350 is likely to trigger a fresh momentum with a possible upside target of over Rs 1500 in the coming days for the stock. The downside protection zone is seen at Rs 1260 levels.
Nocil:
Classic rounding bottom formation was seen on Nocil with the stock breaking out of the consolidation. We expect a large move above Rs 165 mark. Investors can buy the stock for a possible target of Rs 185, and a stop loss can be placed below Rs 149 levels.
Q) Which are the important levels that one should track in the coming week for Nifty and Nifty bank? And data points which one should watch out for?
A) The important level to watch would be 14980 on futures on the downside while on the upside 15260 is an important resistance to watch. If taken out decisively, it would force traders to cover short positions. We expect the Nifty50 to trade in the range of 15,000 to 15,300 for the next week.
BankNifty: Volatility is seen between the band of 35600 to 36680 range. We are currently in the middle of the trading band, and the index is likely to find buying interest at the lower range.
Options selling between the boundaries should be a profitable strategy for the coming week.
Data points for watch out:
A mild hint of long unwinding seen from FII’s derivatives statistics for index futures any further acceleration along with India VIX moving near the lower band can induce volatility going forward.
Q) Please suggest trading ideas for the next 3-4 weeks?
A) Here is a list of top trading ideas for the short term:
Balkrishna Industries:
The stock saw heavy shorting pressure with an aggregate OI jump of 100% during the week. There is a momentum breakdown seen on the stock. It may face resistance near Rs 1720-1730 mark, and we expect downside extending towards the Rs 1500 mark. Traders can look to sell the rallies with a stop around Rs 1730 on the upside, and the target can be placed at Rs 1500.
M&M Finance:
The stock saw a fresh breakout above its impending resistance zone of Rs 200 mark with a sharp pick up in volumes and long buildup on futures. The stock can be bought near Rs 200 mark with a stop of Rs 189, and a target on the upside could be placed at Rs 225 levels.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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