Nifty witnessed high volatility due to rollover movement on October F&O expiry day amid negative global cues on October 29.
During this week, the index failed to break the round number resistance of 12,000 and witnessed sharp profit-booking in the index pivotal.
Bank Nifty outperformed the broader markets and gained 17.8 percent while Nifty gained 8 percent in the October F&O series.
Among other sectors, IT gained 10 percent, Metals 9.3 percent and Auto 5 percent. Pharma and FMCG remained flat to negative, trading sideways, witnessing a time correction over the last few weeks.
Nifty closed at a 3-week low at 11,671 on October 29 and the breakdown of the 50-day average at 11,540 would accelerate the second round of profit-booking pushing the index lower to 11,200.
On the higher side, a crossover of 12,000 would give a sharp breakout for a new high. Mid-caps and small-caps may outperform.
India VIX has closed at a 3-month high at 24 levels and we expect volatility to increase with news flow of fresh lockdown due to COVID-19 in various parts of the world and presidential elections outcome in the USA next week.
Here are two buy and one sell calls for the next 3-4 weeks:
ICICI Prudential Life Insurance | Buy | LTP: Rs 408.90 | Target price: Rs 465 | Stop loss: Rs 378 | Upside: 14%
The stock has completed its corrective action from the recent high of Rs 487, completing its 25.2 percent retracement of the previous up-move from Rs 226 to Rs 487.
Weekly RSI has also reversed upwards from the lower range and 13-week corrective action confirms the reversal from the current levels.
Multiple support levels in the range of Rs 378-385 would protect the stock and they offer a good risk-reward ratio from the current levels.
Siemens | Buy | LTP: Rs 1,285.35 | Target price: Rs 1,430 | Stop loss: Rs 1,210 | Upside: 11%
The stock has closed at an 8-week high and its key technical indicators on the short-term timeframe have reversed giving a buy signal.
On the lower side, its prior low connecting support line and its 200-week SMA worked as a key reversal point.
We believe the stock will utilise prior consolidation and will resume its up-move and it could move towards Rs 1,400.
Godrej Properties | Sell | LTP: Rs 997 | Target price: Rs 880 | Stop loss: Rs 1,060 | Downside: 12%
The stock has made a lower top and closed in an inside range of the previous week candle, suggesting a retracement on the downside.
It has multiple resistance near Rs 1,060-1,070, being 61.8 percent retracement from the recent bottoms.
The key technical indicators on the near-term timeframe chart are negatively poised. Any jump above Rs 1,060-mark will negate its down-move in the stock.
(The author is a senior research analyst at Reliance Securities)Disclaimer: 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.