Nifty50 closed the rangebound session lower on August 19 but managed to hold psychological 11,000 levels amid mixed global cues and hoped of stimulus measures from the government to revive economy.
The index continued to remain volatile as it could not manage to hold gains and shut shop in the red. Now, the index has immediate support at 10,970.
After touching intraday high and low at 11,076.30 and 10,985.30 respectively, the index ended the day with a loss of 37 points, or 0.33 percent, at 11,017. Among the 50 stocks in the index, 20 advanced and 30 declined.
The index formed a bearish candle on daily charts as selling pressure was seen at higher levels while, at the same time, decline was being bought into the market.
On the Options front, maximum Put open interest is at 11,000 followed by 10,800 strike while maximum Call open interest is at 11,000 followed by 11,500 strike.
Minor Call writing is at 11,100 followed by 11,000 strike while Put unwinding is at all the immediate strikes with minor Put Writing at 10,800 strike.
India VIX fell by 0.7 percent to 16.63 levels.
Here is a list of two sell and one buy recommendation for the next one-three months’ horizon:
Tech Mahindra: Buy | LTP: 669.15 | Stop Loss: Rs 640 | Target range: Rs 710-740 | Upside 6-11 percent
On the weekly chart, Tech Mahindra has resumed its upward journey after taking support at the neckline of the channel pattern in its throwback, suggesting higher levels in the coming trading sessions.
On the daily chart, the stock is on the verge of a breakout from the neckline of an inverted head and shoulders pattern placed at Rs 680. A successful breakout backed by higher volumes will take the stock higher to the levels of Rs 710-740.
RSI has turned higher from oversold levels, forming higher lows which confirms that the downtrend is losing steam.
The stock may be bought in the range of Rs 665-675 for targets of Rs 710-740, keeping a stop loss below Rs 640.
United Breweries (UBL): Sell | LTP: Rs 1,321 | Stop Loss: Rs 1,380 |Target range: Rs 1,250-1,200 | Downside 6-10 percent
On the weekly chart, United Breweries has broken down from a trendline support placed at Rs 1,350. Further, it has turned south after facing resistance at the 61.8 percent Fibonacci retracement level which suggest weakness.
On the daily chart, it has broken down and trading below its 200-DMA, suggesting lower levels in the coming trading sessions.
RSI has also turned southward from the resistance zone of 60 which is favouring the bears.
The stock may be sold in the range of Rs 1,330-1,320 for the targets of Rs 1,250-1,200, keeping a stop loss above Rs 1,380.
Asian Paints: Sell | LTP: Rs 1,590.30 | Stop Loss: Rs 1,640 | Target range: 1,500-1,460 | Downside 5-8 percent
On the weekly chart, Asian Paints has started forming small real bodies following a significant rally recently. Further, it started the trading week on a negative note forming a spinning top which suggests that the bulls are losing upper hand.
On the daily chart, it is forming an ending diagonal and is on the verge of a breakdown. A close below Rs 1,570 could mean temporary curtains for the bulls as corrections can be seen to levels of Rs 1,500-1,460.
RSI has formed a negative divergence which favours the bearish view developing currently.
The stock may be sold in the range of Rs 1,590-1,580 for the targets of Rs 1,500-1,460, keeping a stop loss above Rs 1,640.
(The author is Senior Manager, Technical Analysis at YES Securities)
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