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Analyst Rajesh Bhosale of Angel One said that Nifty has been oscillating within a range defined by the 20 and 50-day EMA since last week and a breakout from this range will likely dictate the next directional move. He sees no major traction for markets for now and expects it to trade within this range. The immediate support level is seen at 21,900-21,850, while 21,700 is a key support level, Bhosale said.
He places resistance around 22,200-22,250 suggesting a cautious approach and buy on dips strategy while exiting long positions on rallies in this range.
ETMarkets. spoke to analysts on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:
Analyst: Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities told this to ETMarkets.
Hindustan Copper gives trendline breakout
On Tuesday, the stock of Hindustan Copper gave a downward-sloping trendline breakout on the daily scale. This breakout was confirmed by robust volume. In addition, it has formed a sizeable bullish candle, which adds more strength to the breakout. The stock is demonstrating superior performance compared to the frontline indices. Furthermore, it has recently broken out above a downward-sloping trendline on the ratio chart against the Nifty, suggesting a potential for further outperformance. Moreover, Mansfield’s Relative Strength indicator has consistently remained above the zero line for the past 167 trading sessions, indicating sustained and robust outperformance.Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory and they are in the desired sequence, which suggests the trend is strong. The daily RSI is about to cross the 60 mark on the daily chart. Moreover, the momentum indicator MACD line has crossed above the signal line, which resulted in the histogram turning positive.
The derivative data is also supporting the overall bullish chart structure. The March future has surged by 5.26% and cumulative open interest of current, next and far series has surged by nearly 3%. This indicates an overall long build up. Examining the option chain, it’s notable that there is a concentration of CALL open interest at the 290 strike, followed by 300 strike, while considerable open interest on the PUT side is observed at the 270 strike. Talking about option chains, from 285 to 260 CE strikes have either witnessed CALL buying or CALL short covering. While, on the PUT side, from 280 to 230 strikes have either witnessed PUT writing or PUT long cover. This clearly indicates bullish momentum in stock.
These technical and derivative factors are aligning in favour of bulls. Hence, we recommend to accumulate the stock in the zone of Rs 283-280 with the stop loss of 273. On the upside, it is likely to test the level of Rs 295, followed by 302 in short-term.
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HAL rebounds strongly from support zone and signals potential upside
The stock of Hindustan Aeronautics has formed a Gravestone Doji candlestick pattern on March 11 and thereafter it has witnessed correction. The correction was halted near 38.2% Fibonacci retracement level of its prior upward rally (Rs 2073-3428) and it coincides with the 50-day EMA level.
The stock has formed a strong base near the support zone and witnessed smart rebound along with relatively higher volume. Currently, the stock is trading above its short and long-term moving averages. The daily RSI has surged above 60 mark and it is on a rising trajectory. Moreover, the fast stochastic is trading above the slow stochastic line, which is a bullish sign.
The derivative data aligns with the prevailing bullish chart structure. The March future has surged by nearly 4% and cumulative open interest of current, next and far series has dipped by 2.43%. This indicates overall short covering.
There is a notable concentration of CALL open interest at the 3300 strike, followed by 3400 strike. While significant open interest on the PUT side is observed at the 3200 strike. Talking about option chains, from 3300 to 3160 CE strikes have witnessed CALL short covering. While, on the PUT side, from 3320 to 3160 strikes have witnessed PUT writing. This clearly indicates bullish momentum in the stock.
Hence, we recommend accumulating the stock in the zone of Rs 3300-3270 with the stop loss of Rs 3180 level. On the upside, it is likely to test the level of Rs 3450, followed by Rs 3520 in short-term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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