This week’s action suggests that the Indian benchmark indices remain stuck in a range. They have ended negative in two out of four trading sessions. On Thursday, which was also the day when Finance Minister Nirmala Sitharaman gave her last Union Budget of the Modi 2.0 government, Nifty ended with a slight downtick of 28.25 points or 0.13% at 21,697.45.

“Markets are not in a hurry for the next directional move and the recent price action reaffirms our view,” Ajit Mishra, SVP – Technical Research, Religare Broking said. Traders have no option but to align their positions accordingly and focus more on stock-specific trading approaches, Mishra said as he showed a silver lining in the clouds in the form of action in broader markets.

He said that a consistent outperformance is being seen by the broader indices despite the overbought condition and recommended investors to remain prudent by restricting exposure to only the quality names.

On the upside, sustained trades above 21,500 might lead to an upward movement in the market, he opines.

We spoke to analysts on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:

Trendline breakout sparks optimism for Canara Bank

On the interim budget day, Nifty PSU Bank emerged as the standout performer among all sectoral indices, showcasing a remarkable surge of over 3%, concluding at the 6466 level. This surge significantly outpaced the performance of frontline indices. Notably, the ratio chart of Nifty PSU Bank against the Nifty 500 index reached a fresh 52-week high, indicating the sector’s robust performance relative to the broader market. Moreover, all constituents of Nifty PSU Bank closed on a positive note, underscoring the sector’s resilience and investor confidence.

Meanwhile, Canara Bank’s stock experienced a significant development on its daily chart, breaking out from a horizontal trendline. This breakout was accompanied by trading volumes surpassing the 50-day average, further validating the breakout’s strength. Moreover, the stock formed a sizable bullish candle on the breakout day, enhancing the breakout’s credibility and signalling potential upward momentum.

As the stock is trading at 52-week high, all the moving averages and momentum indicators-based setups are indicating strong momentum in stock. The daily and weekly RSI is in the super bullish zone as per RSI range shift rules. The daily MACD stays bullish as it is quoting above its zero line and signal line. Further, the MACD histogram indicates an uptick in upside momentum, further supporting the bullish outlook for the stock.

On the derivative front, the February series future has surged by 4.1 per cent. The cumulative OI of current, next and far series has surged by nearly 3.52 per cent, which clearly indicates overall long build up. A significant concentration of CALL open interest is evident at the 520 strike, followed by 530 strike. While substantial open interest on the PUT side is concentrated at the 500 strike. Delving into the option chain, there has been a discernible accumulation of long positions from 550 to 500 CALL strikes. Conversely, on the PUT side, there is noteworthy PUT writing observed from 525 to 475 strikes. 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 503-498 level with the stop loss of Rs 485 level. On the upside, it is likely to test the level of Rs 530, followed by 550 in short-term.

CONCOR’s double bottom breakout prompts optimism

The stock of Container Corporation of India (CONCOR) Ltd has marked a high of 932.70 in the first week of January 2024 and thereafter it has witnessed throwback. The throwback was halted near the 50-day EMA level. Interestingly, the stock has formed an Adam and Eve Double Bottom pattern near 50-day EMA level.

On Thursday, the stock gave a neckline breakout of double bottom pattern along with relatively higher volume. In addition, the stock has formed sizeable bullish candle on breakout day. 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 has climbed above the 60 mark for the first time since January 16, 2024, signalling increasing strength in the stock’s momentum. Additionally, the daily MACD remains bullish, residing above the zero line and its signal line. Furthermore, the MACD histogram depicts a surge in upside momentum, reinforcing the optimistic stance for the stock.

The derivative data clearly signals short covering, with a 3.48 per cent surge observed in the January series future. Meanwhile, there is a nearly 1 per cent decline in the cumulative Open Interest (OI) across the current, next, and far series.

There is a notable concentration of CALL open interest at the 950 strike, followed by 1000 strike. While significant open interest on the PUT side is observed at the 900 strike. Talking about option chains, from 980 to 910 CE strikes have witnessed either CALL buying or CALL short covering. While, on the PUT side, from 950 to 890 strikes have either witnessed PUT writing or PUT long covering. This clearly indicates bullish momentum in stock.

Hence, we recommend to accumulate the stock in the zone of Rs 925-915 with the stop loss of Rs 890 level. On the upside, it is likely to test the level of Rs 970, followed by Rs 1000 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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