Nifty outlook & trading ideas by Sacchitanand Uttekar, AVP – Technical (Equity) at Tradebulls:
As expected Nifty maintained its bullish streak post breaking out from the channel formation as it traded confidently above 9,360. The sequence of higher highs is well fueled by incremental volumes & continues to display momentum. The recent shift in highest Put OI to 9,300 supports the positive bias with the highest Call OI seems evenly distributed within 9,500-9,600. Nifty OIPCR has jumped up to 1.44 alongwith the India VIX rebounding from its extreme of 8.84, highlighting towards an over optimistic scenario. The trend strength indicator (RSI) on the daily as well as the weekly scale is reporting an overbought state but without any signs of divergence. Though we continue with our bullish outlook as the headroom remains open till 9,630 for the current leg, but diminishing reward to risk warrants towards avoidance of fresh longs. Hence traders could hold their existing longs with a trailing stop below 9,430 for an extension towards 9,630.
JB CHEMICALS & PHARMACEUTICALS - BUY
CMP: Rs 352
STOP LOSS: Rs 335
TARGET: Rs 385
Positive sector outlook & bullish pennant formation on the weekly scale indicates uptrend to resume soon. The recent rebound from its 200 days EMA was also accompanied with strong volumes which complement the bullish setup. A breach above 370 could amplify the momentum & hence longs could be considered with a stop below 335 for an initial target upto 385 followed by a positional target upto 420.
HEXAWARE TECHNOLOGIES - SELL
CMP: Rs 253.50
STOP LOSS: Rs 256
TARGET: Rs 240
Breakdown from the ‘Rising Wedge’ formation on the intra-day scale along with a negative crossover of the RSI in the overbought zone. The stock has also closed below its 5 days EMA after a positive streak of 20 trading sessions. Trading shorts could be considered with a stop above 258 for a target upto 240.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.
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