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:
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)
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