On the other hand, In line with expectations, the banking benchmark index Bank Nifty has strongly outperformed frontline indices and marked fresh all-time high on Tuesday. It has ended above the 52,600 mark with a gain of nearly 2%
The ratio chart of Bank Nifty as compared to Nifty has marked 24 weeks high, which signals a strong outperformance.
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:
Apollo tyres trendline breakout sparks optimism
The stock of Apollo Tyres has given a breakout of downward sloping trendline breakout on daily scale. This breakout was accompanied by substantial trading volume, nearly four times of 50-day average volume, indicating strong buying interest by market participants. The 50-day average volume stood at 28.47 lakh, while on Tuesday, the stock recorded an impressive total volume of 107.45 lakh. Furthermore, the breakout day saw the formation of a substantial bullish candle, reinforcing the strength of the breakout.
Currently, the stock is trading above its short and long-term moving averages. These averages are in rising mode and they are in the desired sequence, which suggests the trend is strong. The daily RSI is in a super bullish zone and it is on a rising trajectory. The daily MACD stays bullish as it is quoting above its zero line and signal line. The MACD histogram is suggesting pickup in upside momentum.
The derivative data aligns with the prevailing bullish chart structure. The June future has surged by 4% and cumulative open interest of current, next and far series has dipped by over 4%. This indicates an overall short covering rally.
There is a notable concentration of call open interest at the 520 strike, followed by 530 strike. While significant open interest on the put side is observed at the 500 strike. Talking about option chain, on the put side, from 540 to 500 strikes have witnessed put writing. This clearly indicates bullish momentum in stock.
These confluence of technical and derivative factors signals a robust bullish momentum in the stock. Hence, we recommend to accumulate the stock in the zone of Rs 520-515, maintaining a stop loss at Rs 500. The anticipated upside targets include Rs 550, followed by Rs 570 in the short term.
LIC Housing Finance gives Consolidation Breakout
The stock of LIC Housing Finance has marked high of 759.80 on June 18 and thereafter witnessed minor throwback. The throwback was halted near the 13-day EMA level. On Tuesday, the stock gave a consolidation breakout on a daily scale. This breakout was confirmed by robust volume. In addition, it has formed a sizable bullish candle, which adds strength to the breakout.
As the stock is trading at an all-time high level, all the moving averages and momentum-based indicators are suggesting strong bullish momentum in stock. The daily RSI is in the super bullish zone as per RSI range shift rules.
The derivative data is also supporting the overall bullish chart structure. Examining the option chain, it’s notable that there is a concentration of call open interest at the 800 strike, while considerable open interest on the put side is observed at the 740 strike. Talking about option chain, from 820 to 770 CE strikes have witnessed call buying. While, on the put side, from 780 to 740 strikes have witnessed put writing. This clearly indicates bullish momentum in stock.
These technical and derivative factors are aligning in favor of bulls. Hence, we recommend to accumulate the stock in the zone of Rs 770-765 with the stop loss of 740. On the upside, it is likely to test the level of Rs 805, followed by 820 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)
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