The Nifty index is continuously trading above its short-term upward trend line (trend line drawn from 28th June to 20th July’s 2018 low) which indicates that the index has potential to move higher around 11,495 (life time high level) and 11,588.
Indian equity markets rebounded sharply on Tuesday after two consecutive sessions of fall, which lifted the Nifty50 above its psychological crucial level of 11,400, with gains of 0.70 percent at 11435.10 on Tuesday.
The index formed a bullish candle on back of easing domestic consumer inflation data (CPI) and due to defuse fears about Turkey's economic turmoil.
Market sentiments remained upbeat from the start of the day with the Central Statistics Office’s (CSO) data showing that India’s Retail inflation fell to a nine-month low of 4.17 percent in July and that led to pause in depreciation of Rupee against Dollar.
The Nifty50 index is continuously trading above its short-term upward trend line (trend line drawn from June 28 to July 20 low) which indicates that the index has potential to move higher around 11,495 (life time high level) and 11,588 (upper Bollinger band) with the support around 11,376 (trend line) and 11,310 (20EMA) levels.
The Relative Strength Index (RSI) on the daily chart is 67.76, trading near overbought zone and the daily MACD trading above zero line but just crossed below its signal line, which indicates that the bias could remain sideways in upcoming trading sessions.
The volatility index ended down by 0.88 percent at 13.28. A decrease in VIX suggests limited downside and a consolidated up move in the market.
On the Options front, maximum Call open interest of 42.90 lakh contracts is seen at strike price 11,500, followed by 11,600 which now holds 31.21 lakh contracts and maximum Put open interest of 51.91 lakh contracts is seen at strike price 11,000, followed by 11,200 which now holds 46.33 lakh contracts.
As per the options data, the resistance level for Nifty has shifted higher compared to last week and the immediate support is seen around 11,200 and 11,000 levels whereas 11,500 and 11,600 will act as an immediate hurdle in August expiry.
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In daily scale, the stock has given a breakout from its Flag pattern above Rs 305-306 levels on Tuesday with moderate volumes.
The Relative Strength Index (RSI) is trading in an overbought zone but is still showing positive momentum and OBV –on balance volume showing upward momentum whereas (+)DI continuously trading above (-)DI, which indicates limited downside for the stock.
Based on the above observations, traders can buy the stock in the range of Rs 306-308 with a stop loss below Rs 295 (closing) and a target of Rs 330.
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After making marginal consolidation, the stock has given a breakout above Rs 480-481 levels on Monday with higher volumes.
The daily Relative strength index (RSI) showing positive momentum and MACD is trading around zero line with a positive crossover whereas (+) DI trading above (-) DI, which indicates that the stock has the potential to move higher.
Traders can buy the stock in the range of Rs 482-484 with a stop loss below Rs 460 (closing) for the target of Rs 520.
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In daily scale, after giving symmetrical triangle pattern breakout around 1880-1882 levels on last Thursday, the stock was consolidating around its 200 days moving average which is placed at 1885 levels.
It formed a “Bullish Engulfing Candlestick” pattern on Tuesday with higher volumes compared to last two trading sessions. The RSI and MACD are positively poised above their averages whereas positive DI continuously trading above negative DI, signaling strength in the stock.
Traders can buy the stock at current levels and add on dips around Rs 1890-1900 levels for a target of Rs 2100 & 2230 and a stop loss of Rs 1776.Disclaimer: The author is Research Analyst, Guiness Securities. The views and investment tips expressed by investment experts on Moneycontrol are his own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.