Vikas Jain
Nifty crossed its 200-days average on the higher side with sharp outperformance in banking and financials.
The benchmark index closed at the higher end of the range near 76.4 percent retracement of the entire fall from 12,431 to 7,511 levels.
The index is up 9 percent, while mid-cap and small-cap indices are up 4 and 6 percent, respectively, from the last derivatives expiry till date.
Among individual sectors, IT, energy, auto and banks gained 18.8 percent, 8.9 percent, 8.3 percent and 7.3 percent, respectively, while realty and PSU banks are underperformers, declining 5.3 percent and 1.4 percent, respectively, from the last expiry till date.
We believe one should book partial trading profits at current levels and wait for some correction in broader markets.
With the derivatives expiry next week, we expect the markets to trade volatile with rollover movement in individual sectors and stocks.
On the higher side, 11,500 CE strike has the highest OI of 35.1 lakh shares while 11,000 PE strike has OI of 38.2 lakh shares. A breakdown below 10,950 would trigger a sharp sell-off in index pivotal.
Here's one sell and two buy calls for the next 3-4 weeks:
Marico | Buy | LTP: Rs 351.45 | Target price: Rs 395 | Stop loss: Rs 328 | Upside: 12%
The prolonged consolidation and huge underperformance could reverse as it has completed its price-wise correction.
There are multiple support levels in the range of Rs 320-325. The stock offers a good risk-reward ratio from the current levels.
Daily RSI is trading above 60 levels, indicating a bullish setup for the stock. Any fall below Rs 328 will negate the up-move in the stock.
NMDC | Buy | LTP: Rs 86.40 | Target price: Rs 103 | Stop loss: Rs 78 | Upside: 19%
The stock has closed above its short and medium-term averages and the PSU basket is in positive momentum.
It has closed at a 5-week high with strong volumes. RSI is trading above the average line.
Multiple support levels near Rs 80 levels on weekly charts will protect the downside.
Godrej Properties | Sell | LTP: Rs 893.80 | Target price: Rs 760 | Stop loss: Rs 957 | Downside: 15%
The stock retraced 61.8 percent from the down-move, from Rs 1,189-Rs 505, and later remained sideways.
It had been consolidating between Rs 910 and Rs 840 for four weeks.
Key technical indicators on the near-term chart are negatively poised which could drag the stock towards Rs 760.
Any jump above Rs 957 will negate the down-move in the stock.
(The author is Senior Research Analyst at Reliance Securities)
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