Day trading guide for Tuesday’s market

ICICI Securities

The weekly price action formed a bullish belt hold line candle carrying sizable bull candle with higher high-low, indicating acceleration of upward momentum as the index surpassed our intermediate target of 11,800 and resolved out of the past five weeks trading range (11,794-10,790).

Going ahead, we expect the index to consolidate in the broad range of 12,100-11,500 and form a higher base amid stock-specific activity.

Structurally, the index has completely retraced its 19 session’s decline (11,794-10,790) in just nine sessions.

A faster retracement in less than half the time interval highlights medium-term positive bias in the index

Analyst Name: Dharmesh Shah, Head – Technical, ICICI Securities

F&O Strategy:

Buy Axis Bank

• CMP: 466
• Target: 490
• Stop loss: 450

Rationale:

• The first few sessions of the new series saw closure of open interest suggesting continuing short covering. We believe ongoing short covering will continue, which should take the stock higher.
• As the stock is witnessing momentum, closure of positions was seen in near OTM Call strikes. Positions are shifting at higher OTM strikes to Rs 500. At the same time, the Put open interest base is strengthening at the Rs 440 and Rs 450 Put strikes that should act as support on downsides.

Buy Bharat Forge

• CMP: 460
• Target: 495
• Stop loss: 445

Rationale:

• The open interest in Bharat Forge has been gradually declining in the October series as the stock is consolidating in a narrow range. The current OI is almost 10% lower than the OI seen at inception. We believe short covering might take the stock further high from current levels.
• From the options space, the stock has the highest Call option base placed at the Rs 500 strike followed by ATM Rs 460 strike. As the stock has largely remained above these levels, closure of positions should trigger fresh upsides towards Rs 490 in the short term

FX Strategy:


Buy USD-INR

• Buy USD-INR at 73.15-73.25
• Target: 73.65
• Stop loss: 73.00

Rationale:

• The Dollar index found support near 93 levels and witnessed marginal bounce from its support zone of 93.
• This helped INR to revert from its sizable Put base of 73 and we feel the rise in the Dollar index would keep the rupee move in check.

Sell EUR-INR

• Sell EUR-INR at 86.75-86.85
• Target: 86.00
• Stop loss: 87.00

Rationale:

• EURUSD has bounced towards its resistance of 1.18 after moving towards 1.16 levels.
• Weakening of the Euro against all currencies would push EUR-INR pair lower towards the 86 levels.