Shabbir Kayyumi
Nifty took support from the previous swing low placed around 10,583 and lower Bollinger band around 10,580 levels on February 19 and index bounced back sharply. Nifty formed morning star pattern on daily time frame justifying short term bottom placed at 10,585 marks.
Market is trading below its three key simple moving averages 20 DMA, 50 DMA and 200 DMA which are placed between 10,825-10,860 levels, suggesting strong resistance zone on the higher side.
Middle regression line of linear regression channel is placed around 10,850 levels, while a normal bounce back towards this strong confluence zone is awaited.
Sustained trade above 200 DMA (10,860) will resume the up move taking the index higher towards immediate resistance zone of 10,980-11,000 levels. Moreover, a close below the strong support (10,640) will push prices back towards 10,580 marks.
Looking at the derivative structure, highest Open Interest (OI) in PUT is seen around 10,700 strikes and maximum Open Interest (OI) in CALL is around 11,000 levels. Option data indicates an immediate trading range between 10,700 and 11,000 marks.
Bank Nifty - Banking index has taken support from its 200 DMA placed around 26,632 and trading higher. The immediate trading range of 27,300 on higher side and 26,500 on lower side remains intact.
Trade recommendation
Vedanta | Buy around Rs 165 | Target: Rs 188 | Stop Loss: Rs 155 | Upside 14 percent
Vedanta has corrected from the peak of Rs 124 and currently it has shown signs of bottoming out around Rs 74-77 levels.
Formation of Tweezers bottom on weekly chart is showing positive move on upside. Long bullish candle near demand zone on weekly chart is showing the possibility of bounce back further on upside.
With decent volume participation witnessed, we recommend a buy in this scrip at Rs 165 with stop loss of Rs 155 for an upside target of Rs 188 levels.
Jindal Stainless (Hisar) | Buy around Rs 83 | Target: Rs 93 | Stop Loss: Rs 78 | Upside 12 percent
Jindal Stainless seems bottoming out at its lower levels of Rs 74-75 marks from where it is going to form double bottom pattern on daily chart suggesting upsurge on higher side.
Weekly RSI seems to be bottoming out from its oversold levels and daily RSI has been taking support from its rising line which is giving cues that scrip can take a turn on northward side.
Rising histogram in MACD in the negative territory showing its upside moves in coming sessions. Aforementioned rationale suggests buying in the scrip around Rs 83 for the target of Rs 93 with the stop loss of Rs 78 marks on closing basis.
Hero Motocorp | Buy Above: Rs 2,680 | Target: Rs 3,000 | Stop Loss: Rs 2,581 | Upside 12 percent
Hero Motocorp bottomed out near the levels of Rs 2,600 and has been forming double bottom on daily chart. Emergence of hammer on weekly chart is showing upswing move towards upside.
Sustainability of RSI above 50 and positive divergence adds the conviction of buying the scrip above Rs 2,680 for the target of Rs 3,000 with stop loss of Rs 2,581 marks.
Tata Steel | Buy around: Rs 498 | Target: Rs 548 | Stop Loss: Rs 468 | Upside 10 percent
Recently Tata Steel gave falling channel line break out on upside which suggest trend reversal is round the corner.
From last few days, it has been taking support above from its upward sloping line which implying strength. Formation of bullish belt hold while giving trend line breakout indicates stock can upsurge further higher. Buy Tata steel around Rs 498 with stop loss of Rs 468 for the target of Rs 548 levels.
Eicher Motors | Buy around: Rs 20,500 | Target: Rs 22,500 | Stop Loss: Rs 19,500 | Upside 10 percent
Eicher Motors has witnessed a decent correction from the peak of Rs 29780 has bottomed out at near Rs 18800 to make the chart very attractive for accumulation.
Strong support is seen near Rs 20270 where 20 SMA is seen. RSI has indicated a trend reversal with a positive bias and has signaled a buy. With good volume activity witnessed, we recommend a buy in this stock around Rs 20,500 for an upside target of Rs 22,500 keeping a stop loss of Rs 19,500.
(The author is Head - Technical & Derivative Research at Narnolia Financial Advisors.)
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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