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Analyst Rupak De, LKP Securities said that the daily charts suggest Nifty rallying in a Doji candlestick pattern which is a robust bullish reversal. Moreover, the index has successfully reclaimed the crucial 50-day Simple Moving Average (SMA) and could potentially extend its gains towards the range of 22,250-25,300, going ahead, this analyst said.
His advice to investors is to adopt a buy-on-dips strategy as long as the Nifty maintains levels above 21,840.
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.
Siemens’ double bottom breakout prompts optimism
The stock of Siemens India marked a high of 4972 on March 11 and thereafter it has slid into the period of consolidation. Interestingly, during the period of consolidation, the stock has formed an Adam and Adam Double Bottom pattern near its 20-day EMA level. On Thursday, it gave a neckline breakout of the double bottom pattern along with robust volume. In addition, it has formed a sizeable bullish candle and given its highest-ever closing.
As the stock is trading at an all-time high level, all the moving averages and momentum-based indicators are suggesting bullish momentum in the stock. The daily RSI is in bullish territory and it is in rising mode. The trend strength indicator, ADX is quoting above 33 level, which shows robust trend strength. Further, the directional indicators continue in buy mode as +DI continues above –DI.
The derivative data aligns with the prevailing bullish chart structure. The March future has surged by nearly 5 % and cumulative open interest of current, next and far series has surged by nearly 11%. This indicates an overall long build-up.
There is a notable concentration of CALL open interest at the 5000 strike, followed by the 5200 strike. While significant open interest on the PUT side is observed at the 4900 strike. Talking about option chains, from 5200 to 4600 CE strikes have either witnessed CALL buying or CALL short covering. While, on the PUT side, from 5000 to 4500 strikes have witnessed PUT writing. This clearly indicates bullish momentum in the stock.
Hence, we recommend accumulating the stock in the zone of Rs 4950-4900 with the stop loss of Rs 4780 level. On the upside, it is likely to test the level of Rs 5170, followed by Rs 5260 in the short-term.
SRF gives a consolidation breakout
On Thursday, the stock of SRF gave a 9-day consolidation breakout and it has surged above its prior swing high of 2521 level. This breakout was accompanied by the highest trading volume seen in the last 29 trading sessions, indicating strong buying interest from market participants. Furthermore, the breakout was supported by the formation of a substantial bullish candle, further reinforcing the strength of the breakout.
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. Additionally, the daily RSI stands above the 67 level, marking its highest point in the last 71 trading sessions, underscoring significant bullish momentum. Moreover, the daily MACD stays bullish as it is quoting above its zero line and signal line. The MACD histogram is suggesting pickup in upside momentum.
The derivative data is also supporting the overall bullish chart structure. The March future has surged by 3.39% and cumulative open interest of current, next and far series has surged by over 12%. 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 2600 strike, followed by the 2700 strike, while considerable open interest on the PUT side is observed at the 2500 strike. Talking about option chains, from 2640 to 2520 CE strikes have witnessed CALL buying. While, on the PUT side, from 2560 to 2400 strikes have witnessed PUT writing. This clearly indicates bullish momentum in the stock.
These technical and derivative factors are aligning in favour of bulls. Hence, we recommend to accumulate the stock in the zone of Rs 2540-2510 with a stop loss of 2450. On the upside, it is likely to test the level of Rs 2650, followed by 2700 in short-term.
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