At this juncture, the volatility on index is significantly high, therefore, we are waiting for momentum to cool-off as reward-to-risk ratio at this point is not favourable
The persistent sell-off in the US market eventually put break on an ongoing optimism seen in our market and Nifty nosedived in last Friday’s session. During this week, Nifty tumbled further after forming a Bearish Divergence pattern and registered a low of 10,534.55 on Wednesday. Subsequently, the selling pressure exhausted and index saw decent recovery in line with the global peers.
Looking at the daily chart, Wednesday’s low coincided with the lower band of Bollinger band which acted as an immediate support. At this juncture, Nifty retraced nearly 61.8% of its entire fall drawn from the top of 10,985.15 to the bottom of 10,534.55.
At this juncture, the volatility on index is significantly high, therefore, we are waiting for momentum to cool-off as reward-to-risk ratio at this point of time is not favourable. As far as the levels are concerned, 10,830–10,850 zone will be a strong resistance and any sustainable move beyond this level will allow Nifty to rally and retest its recent swing high of 10,985.15. On the flip side, 10,660 likely to act as an immediate support below which Nifty will slide further towards 10,500.
Rollovers from December to January series were inline were expectation. However, short rollovers were seen in metal, auto, cement and pharma sector and that will put pressure on market in short term. Minor pullback is expected in these sectors in the coming week, however, these short covering pullbacks will be short in nature and fresh shorts can be initiated at higher levels in these sectors whereas long rollovers were seen in PSU banking, NBFCs, capital goods and technology sectors and one can expect positive move in coming weeks in them.
On the higher side, aggressive call writing has been seen at 11,000 strike option and that will act as stiff supply zone for Nifty, whereas put writing at 10,500 will prove as strong support. Overall, we expected broader indices to trade in 10,500-10,950 range and breach of this range on either side will further set the direction of indices in short term.
Here is a list of stocks to bet on:
Hexaware | Rating: Buy | Range: Rs 325-320 | Target: Rs 375 | Stop Loss: Rs 300
After correcting sharply from its all-time high of around 550; stock took sharp reversal and nosedived. Subsequently, the selling pressure exhausted near the 290 – 300 zones which coincided with the multiple support zone.
During the week, the bears made a valiant attempt to pull the stock lower however stock managed to hold its previous swing low and formed a higher bottom on daily chart. The daily RSI (14) probably signaled a range shift.
Considering the above technical evidences, we advocate traders to accumulate this stock in a range of 325 to 320 with a price target of 375. Stop loss should be placed at 300 on a daily closing basis.
Adani Ports | Rating: Buy | Range: Rs 380-375 | Target: Rs 410 | Stop loss: Rs 363
Looking at the weekly chart, stock confirmed its breakout from downward sloping trend line drawn from its all-time high. Along with that stock confirmed its breakout from its four weeks of consolidation. The daily RSI (14) entered inside the 60 level which support the bullish hypothesis.
The daily 9-45 EMA on price is positive and indicates the overall trend is up. Hence, we recommend traders to buy this stock in a range of 380 to 375 with a price target of 410. Stop loss should be placed below 363.
Jet Airways | Rating: Buy | Range: Rs 271 | Target: Rs 320-345 | Stop loss: Rs 240
Looking at the daily chart, stock has been in a protracted down trend and registered a fresh 52-week low of 162.80. Subsequently, it saw sharp pullback and rallied towards 367; along with that the daily RSI (14) surpassed the 60 level.
The bullish momentum exhausted and stock resumed its down trend. However, stock found support near 240 which coincided with the 61.8% retracement of its entire move from the bottom of 162.80 to the top of 367. The daily RSI (14) signaled the range shift.
Hence, we advise traders to buy this stock at current level of 271 with a price target of 320 & 345 levels respectively. Stop loss should be placed below 240 on a daily closing basis.
The author is Head of Technical Research at Way2Wealth Brokers.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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