Day trading guide for Tuesday’s market

ICICI Securities

Analyst Name: Dharmesh Shah – Head Technical

The benchmark indices witnessed a strong rebound in the last two sessions from the vicinity of the 200 days SMA amid oversold placement of daily stochastic oscillator. Going ahead, in the ongoing truncated week we expect the index to consolidate with positive bias in the range of 11000-11500 levels amid stock specific action ahead of the Q2FY21 result session.

Empirically, since 2009, post sharp rallies measuring more than 25-30 per cent in the Nifty midcap and small cap indices, the average intermediate correction has been to the tune of 12-15 per cent in next five to six weeks. In current scenario, over past four weeks both indices have corrected 9 per cent, 10 per cent, respectively, from August highs. We expect the broader market indices to maintain the same rhythm. Hence, the current breather should be utilised as an incremental buying opportunity in quality mid cap stocks.

Analyst Name: Dharmesh Shah – Head Technical

StockReco.CMPTargetStop LossNote
UltraTech CementBuy393541703820Buying demand at the lower band of the rising channel containing the entire up move of last six months thus offers favourable risk reward set up.
Hero MotoCorp Buy308732402990Price formed a higher base at the 50 days EMA which has acted a strong support since May and RSI in buy mode.
Ajanta PharmaBuy158616951525The stock in steady up trend and is seen forming a base at the 100 days EMA and the rising demand line joining lows since December 2019.

F&O Strategy:
Head Derivatives- Raj Deepak Singh

Buy Godrej Consumer Products

CMP: 713

TARGET: 755

STOP LOSS: 685

Rationale:

  1. In the ongoing volatility of index, stocks specific out performance is evident. While most FMCG stocks witnessed sharp declines recently, Godrej Consumer Products has seen continued buying support and exhibited significant resilience. The stock has significant Call base at 720 strike for the October series where closure of positions were observed suggesting expectations of further upsides.
  2. Even the open interest has remained largely intact in Godrej Consumer Products despite liquidation seen in most of the stocks during September settlement indicating intact long bias. We expect declines in the stock to be limited and current levels provides a good risk reward opportunity.

Sell Bajaj Auto October Futures

CMP: 2984

TARGET: 2820

STOP LOSS: 3060

Rationale:

  1. For the major part of the September series, Auto stocks observed selling pressure at higher levels due to continuous profit booking. After making highs near 3150 levels in July, Bajaj Auto has been hovering below these levels amid continued Call additions indicating expectations of limited upsides.
  2. The stock has seen significant Call writing at 3000 for the October series and the Call base is almost double than any of the Put base for the stock. Moreover, rollover of short positions was seen in the current series and we expect it to move towards 2800 levels in the days to come.

Forex Strategy:
Head Derivatives- Raj Deepak Singh


Sell USDINR

Sell USDINR at 74.00 – 74.10

TARGET: 73.50

STOP LOSS: 74.25

Rationale:

  • USDINR started the October series on optimistic note and moved towards the level of 74 as Dollar index remained at the elevated levels.
  • However, huge Call writing positions are open in 74 strike are intact and we feel INR would appreciate from here till 73.5 levels.
Resistance74.1074.2074.30
Support73.8073.6573.50

Sell EURINR
Sell EURINR at 86.25-86.35

TARGET: 85.20

STOP LOSS: 86.65

Rationale:

  • EURUSD failed to hold its important levels of 1.18 and has slipped towards 1.16 on the back of sharp rise in Covid-19 cases.
  • Weakening of EUR against all currencies would push EURINR pair lower towards the 85 levels.
Resistance86.4586.6586.65
Support86.0085.5085.20

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