Derivative data witnessed strong & confident CE writing open interest mounting at 11,100 & 11,200 strikes which could face significant unwinding pressure once the index surpasses 11,100 mark.
Nifty snapped its 4-day losing streak following strong global cues & regained 11,000 mark again after finding a support near its 20 DEMA zone placed around 10,940. Its corresponding daily RSI value also saw a swing close to 52.77 in yesterday's session ahead of its crucial zone of 50 while a breach below the same could indicate early signs of distortion of its ongoing bullish sequence.
Derivative data witnessed strong & confident CE writing open interest mounting at 11,100 & 11,200 strikes which could face significant unwinding pressure once the index surpasses 11,100 mark. On the flip side for the current weekly expiry PE writing positions remain evenly distributed around 10,800 to 10,900. Since the index has again rebounded from 10,860 (61.8 percent retracement zone of its prior impulse) with its RSI above 52 expect the upmove to gather momentum only above 11,377 while an intermediate hurdle could be faced around 11,200-12,240 zone.
Hence it is ideal to remain cautious from hereon & restrict trades to intraday & short term itself with more emphasis on stock specific trade setups on either side. Weakness if any would only need validation below 10,880 for any larger degree corrective move until then expect action to continue within 10,900-11,400 zone.
Here is the list of three stocks which could return upto 21 percent in short term:
Avanti Feeds: Buy | Target: Rs 580 | Stop Loss: Below Rs 440 | Return: 21 percent
Avanti Feeds had been oscillating around its 200 DEMA since last few weeks. Post the intermediate correction the stock witnessed stable price consolidation around its 200 DEMA while corresponding daily RSI saw a breakout above its 50 mark which were signs of fresh momentum. Longs could be added with as stop below Rs 440 for an intermediate target towards Rs 580 zone.
Lupin: Buy | Target: Rs 1,020 | Stop Loss: Below Rs 900 | Return: 8.5 percent
Positive sector outlook & a recent breakout above its 200 WEMA signals a strong sign of continued strength even in the coming weeks. Stock has been witnessing strong long unwinding cycle as indicated by its open interest activity & hence a breakout above Rs 950 could attract further momentum. Trading longs should also be added now with a stop below Rs 900 for a move towards Rs 1,020.
HCL Technologies: Sell | Target: Rs 665 | Stop Loss: Above Rs 707 | Return: 4 percent
Occurrence of an Bearish Belt Hold formation near its previous swing resistance zone reaffirms the resistance placed at Rs 710 zone. A breakdown below Rs 694 could unlock a temporary corrective move within the ongoing upmove towards Rs 660-665 zone where its 20 DEMA is placed. A conditional sell could be deployed only on a breach below Rs 694 for an immediate move towards Rs 665 with a stop above Rs 707.
The author is DVP – Technical (Equity) at Tradebulls Securities.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.