Day trading guide for Monday’s market

Chandan Taparia, Motilal Oswal

Nifty opened positive on Friday and continued its positive to range-bound move towards 11,940 zone. It managed to hold 11,800 and closed the last day of the week with a gain of around 80 points. The index has continued formation of higher lows for the tenth trading session. The entire base of the market is shifting higher to hit the psychological 12,000 level, a new lifetime high.

Nifty has formed a bullish candle on the daily and weekly scales and gave its highest weekly close in the last 31 weeks since 20th Feb 2020. The index continued its winning streak for the seventh consecutive session on Friday and rallied by more than 1,100 points in the last 11 trading sessions. Now it has to continue to hold above 11,800 level to move towards 12,000, and then 12,200, while on the downside major support exists at around 11,750.

ICICI Bank: Buy
CMP: Rs 401
Target Price: Rs 422
Stop Loss: Rs 391
Bullish crossover with buying interest in most of the banking counters. A decisive hold above 400 zones could take it towards swing high of Rs 422.

Apollo Hospital: Buy
CMP: Rs 2,277
Target price: Rs 2,400
Stop Loss: Rs 2,222
Higher top – higher bottom on daily and weekly scale along with major consolidation breakout.

Havells: Buy
CMP: Rs 710
Target: Rs 750
Stop Loss: Rs 692
Consolidation breakout above 700 zones after 15 trading sessions.

Hero MotoCorp: Buy
CMP : Rs 3,327
Target: Rs 3,500
Sop Loss: Rs 3,250
Strong momentum from last seven consecutive months along with steady outperformance in the entire auto sector

Derivatives
India VIX moved up by 11.06 per cent from 18.35 to 20.38 levels, overall lower volatility suggests bullish bias in the market. On option front, maximum Put OI is at 11,500 followed by 11,000 strike, while maximum Call OI is at 12,500 followed by 12,000 strike. We have seen marginal call writing in 12,400 and 12,200 strike while Put writing is seen at 11,500, then 11,800 strike. Option data suggests a wider trading range in between 11,500 and 12,200 zones and an immediate trading range between 11,700 and 12,100.

Favourable cues from RBI policy meet boosted Bank Nifty to head towards 23,900 levels. It formed a strong bullish candle on the daily and weekly scales along with higher highs formation of last six sessions. It closed the day with gains of around 650 points and registered a weekly rise of around 1,600 points. Now it has to continue to hold above 23,500 zones to witness an up move towards 24,200 and then 24,500 zones while on the downside, key support exists at 23,200 and 23,000 zones.

Options
Bull Call Spread: +11900 CE – 12050 CE : (15th October, Weekly expiry)

Buy 1 lot of 11,900 Call @ 121
Sell 1 lot of 12,050 Call @ 54
Net premium paid: 67 points

Keep SL of net premium of 30 points: Risk of 37 points
Keep target of new premium of 140 points: Reward of 73 points

RATIONALE:

Nifty has been making higher lows from last ten trading sessions

Put Call Ratio has seen recovery from lower zones with Put writing at immediate strikes

Volatility is overall at lower zones which is suggesting market stability

Thus, suggesting Bull Call Spread to get the benefit of positive move in the market

Forex & Interest Rate Technical

Kishore Narne, MOFSL

USD/INR Status: The pair is likely to trade in a lower range in the short-term!

CMP: 73.05
Target: 72.50
Stop Loss: 73.80

Trade: The pair is likely to trade with negative bias as long as 73.80 is capped as resistance. Selling on rise around 73.40 is advised targeting 72.50 levels.

EUR/USD Status: The pair is likely to trade with positive bias for short-term!

CMP: 1.1826
Target: 1.1975
Stop Loss: 1.1735

Trade: The pair is in a pullback move and is likely to trade in a higher range for short-term. Dip buying is advised as long as price holds above 1.1735. It is likely to target 1.1975 levels.

Commodity Calls:
Amit Sajeja, MOFSL