Abhishek MondalGuiness Securities
After notching record highs on Monday, benchmark indices showed signs of exhaustion at higher levels and extended the previous session’s negative journey.
The Nifty50 ended Tuesday’s trade on a pessimistic note as investor sentiment was largely battered by stretched valuations along with weak rupee and rising crude oil prices.
After making a cautious start, the index traded in a very tight range near the neutral lines for most part of the day before closing 62 points lower at 11,520.30.
The index formed a ‘Bearish Belt Hold’ kind of candlestick pattern.
As per the Dow Theory, the index has formed a lower top-lower bottom formation on the hourly chart and on the daily scale, the index has closed below the upward-sloping channel in the last two days, indicating a negative bias for next few trading sessions.
If Nifty trades below 11,500 level, then this downward momentum will continue towards 11,434 and 11,340 levels whereas 11,600 and 11,660-mark will act as immediate resistance.
The Relative Strength Index (RSI) on the daily chart is 54.86, falling from the highly overbought zone and the MACD is trading above zero line but with a negative cross which indicates that price may come down further in upcoming trading sessions.
The volatility index ended up by 2.9 percent to close at 13.78 but is still trading below its heedful mark of 14. A sideways move in VIX suggests a consolidated move in the market.
On the Options front, maximum Call open interest of 43.95 lakh contracts is seen at strike price 11,800, followed by 12,000 which now holds 31.13 lakh contracts and maximum Put open interest of 38.20 lakh contracts is seen at strike price 11,500, followed by 11,400 which now holds 35.71 lakh contracts.
As per the options data, the support level for Nifty is shifted lower compared to last week and the immediate support is seen around 11,500 to 11,400 levels whereas 11,800 will act as a strong hurdle in this expiry.
Here is a list of top three stock which could give 5-14% return in next 1 month:
Shriram Transport Finance Company Ltd: SELL | Close: 1297.25 | Target: Rs 1260 & 1230| Stop loss: Rs 1335 | Return: 3.08%
The stock has given a breakdown from the Symmetrical Triangle pattern around 1323-1322 on Monday with higher volumes. The daily Relative strength index (RSI) is showing negative momentum and MACD is trading around zero line with negative cross whereas (-) DI trading above (+) DI, signaling weakness in the stock.
Traders can sell the stock after some technical bounce around Rs 1300-1305 with a stop loss above Rs 1335 (closing) for a target of Rs 1260 & 1230 levels.
Mahindra CIE Automotive: BUY | Close: 277.90 | Target: Rs 318 | Stop loss: Rs 258 | Return: 14.43%
After making long consolidation, the stock has given a breakout above Rs 265-266 levels on Monday with a strong price momentum along with high volumes which helped the stock to cross its stiff resistance levels of 277-278.
The weekly Relative strength index (RSI) is trading at overbought zone but till showing positive trends and MACD is trading above zero line with positive crossover whereas (+) DI continuously trading above (-) DI, which indicates that the stock has the potential to move higher.
Traders can buy the stock at current levels and can add on dips around Rs 268-270 with a stop loss below Rs 258 (closing) for the target of Rs 318.
Shreyans Industries: BUY | Close: 178.85 | Target: Rs 205 | Stop loss: Rs 163 | Return: 14.62%
In daily scale, the stock has given breakout from symmetrical triangle pattern around 175-176 on Tuesday with higher volumes. The momentum indicators are in bullish mode on the weekly scale whereas (+) DI trading above (-) DI, signaling strength in the stock.
Traders can buy the stock in the range of Rs 176-179 with a stop loss below Rs 163 (closing) for a target of Rs 205
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
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