On the weekly expiry day, the benchmark index Nifty traded within a narrow range of 127 points, marking the lowest daily range since May 24, 2024. Meanwhile, Bank Nifty traded within a narrow range of 386 points.

Over the past four trading sessions, Nifty has traded within a narrow range of 1% and has formed small-bodied candles. This typically suggests indecisiveness prevailing at current levels.

The 30-share BSE benchmark Sensex surged 204 points, or 0.27%, to settle at 76,811. The broader NSE Nifty gained 76 points, or 0.33%, to end at 23,399.

Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities, suggests how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:

CHOLAFIN’s Trendline Breakout Sparks Optimism
Cholamandalam Investment and Finance Company shares have given a horizontal trendline breakout on the daily scale. This breakout was accompanied by substantial trading volume, over three times of 50-day average volume, indicating strong buying interest by market participants. The 50-day average volume stood at 15.15 lakh, while on Thursday, the stock recorded an impressive total volume of 47.92 lakh. In addition, the stock has formed a sizable bullish candle on breakout day, which adds strength to the breakout.

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As the stock is trading at an all-time high level, all the moving averages and momentum-based indicators are suggesting strong bullish momentum. The daily RSI is in the super bullish zone as per the RSI range shift theory. The daily MACD stays bullish as it is quoting above its zero line and signal line. The MACD histogram suggests a pickup in upside momentum.

The derivative data aligns with the prevailing bullish chart structure. The June future has surged by 5.25% and cumulative open interest of current, next, and far series has dipped by nearly 2%. This indicates an overall short-covering rally.

There is a notable concentration of call open interest at the 1480 strike, followed by the 1,500 strike. While significant open interest on the put side is observed at the 1400 strike. Talking about the options chain, from 15,20 to 1,400 CE strikes have witnessed call buying. While, on the put side, from 1,520 to 1,280 strikes have witnessed put writing. This clearly indicates bullish momentum in the stock.

This confluence of technical and derivative factors signals a robust bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 1440-1430, maintaining a stop loss at Rs 1,390. The anticipated upside targets include Rs 1510, followed by Rs 1,540 in the short term.

Short Covering Signals Bullish Sentiment for BEL
The stock of Bharat Electronics formed a Hanging Man candlestick pattern on June 03, 2024, and thereafter witnessed a sharp correction. The correction was halted near a 61.8% Fibonacci retracement level of its prior upward rally (Rs 179-323) and it has resumed its northward journey. The major trend of the stock has remained bullish as it is marking the sequence of higher tops and higher bottoms on the daily scale.

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 surged above the 60 mark and it is on a rising trajectory.

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The derivative data supports the overall bullish chart structure. The June futures have surged by nearly 4%, while the cumulative open interest of the current, next, and far series has decreased by nearly 2%, indicating an overall short-covering rally.

Examining the option chain, it’s notable that there is a concentration of call open interest at the 310 strike, while considerable open interest on the put side is observed at the 300 strike. Talking about the options chain, from 310 to 300 CE strikes have witnessed call buying. On the put side, from 300 to 285 strikes have either witnessed put writing or put long covering. 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 301-298 with the stop loss of 290. On the upside, it is likely to test the level of Rs 315, followed by 322 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)