The current data points suggest that media, oil & gas and chemical stocks may outperform the frontline indices while IT, pharma and power stocks may witness selling pressure.
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 ETMarkets
Hindustan Petroleum bounces from support zone
The stock of Hindustan Petroleum Corporation had given a breakout from downward sloping trendline resistance zone on November 07, 2023 and thereafter it had witnessed sharp upside rally of over 26 per cent in just 8-trading sessions. However, after registering the high of Rs 334.70, the stock has witnessed minor throwback.
The throwback had halted in the zone of Rs 300-302 level, which was a confluence of 38.2% Fibonacci retracement level of its prior upward move (Rs 239-334.70) and 13-day EMA level. The stock has formed a strong base near the support zone and resumed its northward journey on Thursday. The reversal from support zone is confirmed by robust volume of nearly three times of 50 days average volume, indicating strong buying interest by market participants.
Currently, the stock is trading above its short and long-term moving averages. These averages are on a rising trajectory. The momentum indicators and oscillators are also supporting the overall bullish chart structure.
On the derivative front, long build up is visible as price has surged by nearly 7 per cent along with cumulative OI of current, next and far series rising by nearly 2 per cent. Talking about option chain, from 300 to 330 CE strikes have witnessed call short covering. On the put side, from 320-315-310 strikes witnessed a put writing. This clearly indicates bullish momentum in stock & possibility of buying support on all dips.
Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 350 followed by Rs 360 in the short-medium term. Stop loss can be maintained at Rs 310 on a closing basis.
F&O data suggest long build up in Deepak Nitrite
On Thursday, the stock gave an 11-day’s consolidation breakout on the daily chart, which closely resembles the Symmetrical Triangle pattern. This breakout was supported by robust volume of nearly 9 times of 50 days average volume, indicating strong buying interest by market participants. The 50-day average volume was 2.93 lakh while on Thursday the stock registered a total volume of 11.55 lakh. In addition, the stock has formed a sizable bullish candle on breakout day, which adds strength to the breakout.
Currently, the stock is trading above its short and long-term moving averages. The 20 and 50-day EMA has started edging higher. Interestingly, leading indicators 14-period daily RSI has surged above 60 mark for the first time after 47-trading sessions. The uptick in MACD histogram is suggesting pickup in upside momentum.
On the derivative front, the stock has witnessed long build up as price has surged by over 3% and cumulative OI has surged by 5.54%. Talking about option chain, call short covering is clearly visible on most of the strikes from 2100 to 2180. At the same time, put writing is also visible on most of the strikes such as 2200-2180-2100. This indicates overall bullish sentiment in derivative space.
The technical and derivative evidence indicate a strong upside in the next couple of trading sessions. Traders can accumulate the stock between Rs 2210 to 2200 with a stop loss of Rs 2130 (closing basis) for an upside target of Rs 2320, followed by Rs 2360 in short-term.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)