Nifty faces substantial resistance in the range of 19800-19900, and a breakthrough of these levels could trigger a swift upward movement, prompting an unwinding on the call side and potentially propelling the Nifty to the 20000–20200 zone, said Ameya Ranadive of Choice Broking.
Options data reveal maximum open interest on the put side at the 19,700 strike, serving as a pivotal support for the index.
Conversely, significant call writing is observed at the 19,900 strike, with additional resistance levels at 20,300 and 20,400 strikes.
We spoke to Sudeep Shah of SBI Securities on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:
Long build-up in Titan
Considering the daily chart, the stock has given downward sloping trendline resistance breakout on November 16. After registering the high of Rs 3366, the stock has witnessed minor throwback along with low volume. During the period of throwback, the stock has re-tested the breakout level and started rising higher with robust volume.
The stock is strongly outperforming frontline indices. The Relative strength comparison with Nifty 50 has marked a fresh all-time high. Moreover, Mansfield Relative Strength is above zero line since last 170 trading sessions.
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. The daily and weekly RSI is in the super bullish zone as per RSI range shift rules. The Average Directional Index (ADX), which shows trend strength, is as high as 25.30 on a daily chart and 29.54 on a weekly chart. Generally, above 25 levels is considered as the strong trend. In both time frames, the stock is meeting the criteria.
On the derivative front, long build up is clearly visible as price has surged by 1.40 per cent. While, cumulative OI of current, next and far series has surged by nearly 2 per cent.
The technical and derivative evidence indicate a strong upside in the next couple of trading sessions. Traders can accumulate the stock between Rs 3380 to 3400 with a stop loss of Rs 3310 (closing basis) for an upside target of Rs 3530, followed by Rs 3600 in short-term.
HDFC Life gives falling channel breakout
The stock has been trading in a falling channel since the last 89 trading sessions. On Tuesday, the stock gave a breakout of the falling channel on daily scale. This breakout was supported by robust volume of nearly double of 50 days average volume, indicating strong buying interest by market participants. The 50-day average volume was 27.70 lakh while on Tuesday the stock registered a total volume of 50.77 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 momentum indicators and oscillators are also supporting the overall bullish chart structure. On Tuesday, the stock has given close above upper Bollinger Band, which shows strong momentum in stock.
On the derivative front, long build up has been witnessed as the price has surged by 2.29 per cent. The cumulative OI of current, next and far series has surged by 2.09 per cent. Talking about option chain, call buying and call short covering is clearly visible on most of the strikes. At the same time, put writing is also visible on most of the strikes. This indicates overall bullish sentiment in derivative space.
Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 700 followed by Rs 720 in the short-medium term. Stop loss can be maintained at Rs 650 on a closing basis.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)