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Decoding the current trends, analyst Jatin Gedia of Sharekhan said that Nifty is range-bound between 22,200–22,600 in the past seven trading sessions. On the daily charts, one can observe that multiple support parameters in the form of the 20-day moving average (22,199) and the previous swing low (22,224) are likely to absorb the selling pressure and provide a cushion in case of a decline, Gedia said as he places resistance at 22,500–22,550.
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.
TCS gives channel breakout as Nifty IT outperforms frontline indices
In Tuesday’s trading session, Nifty IT has outperformed frontline indices as it has surged by 0.64% and it has ended above the 37200 mark. Among the constituents of Nifty IT, Tata Consultancy Services Ltd (TCS) has given a falling channel breakout. This breakout was supported by robust volume. Most noteworthy, since the last three trading sessions, the stock has witnessed above 50-day average volume, which is a sign of accumulation. The Mansfield Relative Strength is started sustaining above the zero line, which shows outperformance as compared to the broader market, i.e. Nifty 500. 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 leading indicator, the 14-period daily RSI, has surged above the 60 mark for the first time after 15 trading sessions. The fast stochastic is trading above its slow stochastic line, which is a bullish sign.The derivative data aligns with the prevailing bullish chart structure. The March future has surged by 1.68% and cumulative open interest of current, next and far series has surged by nearly 5%. This indicates an overall long build-up. There is a notable concentration of CALL open interest at the 4200 strike, followed by the 4300 strike. While significant open interest on the PUT side is observed at the 4100 strike, followed by the 4000 strike. Talking about option chains, from 4180 to 4600 CE strikes have witnessed CALL buying. While, on the PUT side, from 4260 to 4040 Strikes have witnessed PUT writing. This indicates bullish momentum in the stock.
Hence, we recommend accumulating the stock in the zone of Rs 4200-4170 with the stop loss of Rs 4060 level. On the upside, it is likely to test the level of Rs 4400, followed by Rs 4480 in the short-term.
Oberoi Realty slips below 100-day EMA level
On Tuesday, Nifty Realty strongly underperformed frontline indices as it tumbled nearly 4% and ended below the 900 mark. It has slipped below the 20-day EMA level for the first time after February 2024. Among the constituents of Nifty Realty, over 90% of stocks have ended on a negative note.
The stock of Oberoi Realty Ltd has given a Rising Channel breakdown on the daily scale. This breakdown was supported by a relatively higher volume. Along with this breakdown, the stock has tumbled below the 100-day EMA level. In addition, the stock has formed a sizeable bearish candle on breakdown day, which adds more bearishness.
Among the momentum indicators, the 14-period daily RSI has given a bearish crossover and it is in falling mode. The daily and weekly Stochastic is also suggesting bearish momentum in the stock. The daily ADX is quoting below the 20 mark. While, -DI has surged above +DI, which is a bearish sign.
The derivative data is also supporting the overall bearish chart structure. On Tuesday, the February future ended with a loss of over 2% and the cumulative OI of the current, next, and far series dipped by nearly 1%, which indicates overall long unwinding. There is a notable concentration of CALL open interest at the 1400 strike. While significant open interest on the PUT side is observed at the 1300 strike. Talking about option chains, from 1400 to 1400 Strikes have either witnessed PUT writing or PUT short covering. This indicates bearish momentum in the stock.
Hence, we recommend selling the stock in the zone of Rs 1325-1335 with a stop loss of Rs 1370 level. On the upside, it is likely to test the level of Rs 1260, followed by Rs 1235 in the 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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