Nifty retained its winning streak on Tuesday for the sixth session in a row and hit a fresh lifetime high catapulted by index heavyweight HDFC Bank. The 50-stock index finished at 22,196.95, higher by 74.70 points or 0.34%.

Nifty continues its upward momentum following a consolidation breakout on the daily chart, Analyst Rupak De, LKP Securities said, adding that the trend remains robust as the headline index has sustained itself both above the psychological level of 22,000 and the 21EMA on the daily timeframe.

According to him, it may move towards 22,400-22,600 once the index decisively surpasses the 22,200 mark. De placed support at 22,000.

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:

Analyst: Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities told this to ETMarkets.

Power Grid gives trendline breakout

Power Grid is in strong uptrend as it is marking the sequence of higher tops and higher bottoms. Over the past few months, it has demonstrated significant outperformance compared to frontline indices. The ratio chart comparing Power Grid to Nifty has recently hit an all-time high, suggesting a robust relative strength. Additionally, the Mansfield Relative Strength indicator has consistently remained above the zero line for the last 130 trading sessions, indicating sustained outperformance. This clearly indicates strong momentum and sustained positive performance relative to its peers and the broader market.On Tuesday, the stock experienced a breakout from a downward sloping trendline, accompanied by strong volume, indicating significant buying interest. Moreover, the breakout was reinforced by the formation of a sizeable bullish candle, further validating the strength of the breakout pattern. The daily Relative Strength Index (RSI) is currently in the super bullish zone, signaling strong buying momentum. Additionally, the trend strength indicator, Average Directional Index (ADX), is above 40, indicating robust strength in the current trend. The derivative data clearly signals significant short covering, with a 4.15% surge observed in the February series future. Meanwhile, there is a notable 2.53% 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 290 strike, followed by 300 strike. While significant open interest on the PUT side is observed at the 270 strike. Talking about option chains, from 300 to 287.50 CE strikes have witnessed CALL buying. While, on the PUT side, from 295 to 267.50 strikes have witnessed PUT writing. This clearly indicates bullish momentum in stock.

Hence, we recommend accumulating the stock in the zone of Rs 288-286 with the stop loss of Rs 278 level. On the upside, it is likely to test the level of Rs 300, followed by Rs 310 in short-term.

Deepak Nitrite rebounds strongly from support zone, signals potential upside

After exhibiting a Shooting Star candlestick pattern on January 01, 2024, the stock of Deepak Nitrite Ltd underwent a corrective phase, witnessing a substantial decline of over 14% within a mere 30 trading sessions. Interestingly, the trading volume activity remained subdued during this corrective phase. The correction had halted near the 200-day EMA level, and it coincides with 61.8% Fibonacci retracement level of its prior upward rally (Rs 1922-Rs 2521).

The stock has established a robust foundation around the support zone of 2150-2180 and has demonstrated a notable rebound. During Tuesday’s trading session, the stock surpassed its 20-day high and exhibited a substantial bullish candle. The reversal from the support zone was accompanied by relatively high trading volume, confirming the strength of the reversal from the support zone. Currently, the stock is trading above its short and long-term moving averages. These averages have started edging higher. The daily RSI is about to cross the 60 mark, which is a bullish sign.

The derivative data is also supportive of the overall bullish chart structure. The February futures have surged by 3.25%, and the cumulative open interest of current, next and far series has surged by 12.13%. This indicates overall long build-up. Examining the option chain, it’s notable that there is a concentration of CALL open interest at the 2400 strike, while considerable open interest on the PUT side is observed at the 2200 strike. Talking about option chains, from 2460 to 2340 CE strikes are witnessing CALL buying. While, on the PUT side, from 2380 to 2240 the strike has witnessed PUT writing. This clearly indicates bullish momentum in stock.

These technical and derivative factors are aligning in favour of bulls. Hence, we recommend accumulating the stock in the zone of Rs 2360-2340 with the stop loss of 2280. On the upside, it is likely to test the level of Rs 2480, followed by 2520 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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