The BSE Sensex fell by 800 points or nearly 1% to 81,400, while the Nifty50 dipped below the 25,000 mark, falling by 260 points or 1% to 24,890 in morning trade.
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:
Indian Hotels sees strong rebound from support zone
The stock of The Indian Hotels Co. broke out of a Symmetrical Triangle on August 26, reaching a high of Rs 669.80 before entering a consolidation phase. During this period, it successfully retested the breakout level, establishing a solid base near that zone. The stock has since resumed its upward momentum, with the reversal from the support area confirmed by above-average volume, signalling renewed strength.
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 the stock. The daily and weekly RSI is in the super bullish zone as per RSI range shift theory.
The derivative data is also supporting the overall bullish chart structure. The September future has surged by 1.40% and cumulative open interest of current, next and far series has surged by 1.03%. This indicates an overall long build-up. Examining the option chain, it’s notable that there is a concentration of call open interest at the Rs 700 strike, while considerable open interest on the put side is observed at the 650 strike. Talking about option chain, Rs 670 and Rs 700 CE strikes have witnessed call buying. While, on the put side, from Rs 710 to Rs 630 strikes have witnessed put writing. This clearly indicates bullish momentum in stock. These technical and derivative factors are aligning in favour of bulls. Hence, we recommend to accumulate the stock in the zone of Rs 670-665 with a stop loss of Rs 645. On the upside, it is likely to test the level of Rs 700, followed by Rs 720 in short-term.
Titanβs trendline breakout sparks optimism
The stock of Titan Company has given a horizontal trendline breakout on daily scale. This breakout was supported by robust volume of more than double of 50 days average volume, indicating strong buying interest by market participants. The 50-day average volume was 15.19 lakh while on Thursday the stock registered a total volume of 34.38 lakh. In addition, the stock has formed a sizable bullish candle on breakout day, which adds strength to the breakout.
Currently, the stock is trading above its short and long-term moving averages. These averages are on a rising trajectory, which suggests the trend is strong. The daily RSI is in the super bullish zone. Further, the trend strength indicator, ADX is quoting above 28 level, which shows robust trend strength.
ETMarkets.comThe derivative data aligns with the prevailing bullish chart structure. The September future has surged by nearly 3% and cumulative open interest of current, next and far series has dipped by 1.41%. This indicates an overall short covering rally.
There is a notable concentration of call open interest at the Rs 3,800 strike, followed by Rs 4,000 strike. While significant open interest on the put side is observed at the Rs 3,700 strike. Talking about option chain, from Rs 4,120 to Rs 3,680 CE strikes have witnessed call buying. While, on the put side, from Rs 3,920 to Rs 3,600 strikes have witnessed put writing. This clearly indicates bullish momentum in stock.
Hence, we recommend to accumulate the stock in the zone of Rs 3,730-3,700 with the stop loss of Rs 3,600 level. On the upside, it is likely to test the level of Rs 3,900, followed by Rs 3,980 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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