“Sentiment may improve, and the price could recover unless it breaks below the recent low of Rs 2,722,” says Rupak De, Senior Technical Analyst, LKP Securities. RIL will announce its Q2 results post-market hours today.
In this chat with ETMarkets, De also shares 3 stock ideas – GMDC, KPIT Tech and HUL. Edited excerpts:
How do you read last week’s consolidation in the market? Do you think Nifty is forming a solid support base around 24,700-levels and that any downside from hereon could be limited?
During the last week, Nifty formed a bullish harami pattern, indicating the possibility of a bullish reversal. However, traders remain indecisive despite this significant technical pattern forming at a support level, leading to consolidation in recent days. On the lower end, 24,700 has held as a key support level and may continue to be crucial in the short term. A break below 24,700 could strengthen bearish sentiment, while a decisive move above 25,000 could trigger a rally towards 25,350/25,400 in the short term.
For Nifty Bank-addicts, do you think they will shift to monthly expiries or Sensex or Nifty weeklies?
The craze for Bank Nifty weekly options might be dampened once the NSE discontinues weekly contracts for Bank Nifty, Nifty Midcap, and Nifty Financial Services indices. Traders hooked on Bank Nifty weekly options have about a month left, with the last available weekly expiry on November 13, 2024. Afterward, some may shift to Nifty weekly options, which remain available, while others may move to Bank Nifty monthly options. However, it’s hard to predict how this intense love for weekly Bank Nifty options will end—just like how T20 cricket fans may not instantly warm to one-day matches if T20 is discontinued. Time will tell whether traders will embrace the steadier monthly expiries or continue to crave the excitement of weekly options, much like T20 fans preferring thrill over the strategic depth of one-day games.
What is the kind of impact you think the move is going to have on option premiums as a result of the regulatory change?
The monthly premium movement will be more stable compared to weekly options because monthly options experience slower theta decay and have lower gamma risk.
Before RIL announces its result on Monday evening, how would you want to trade the stock in the morning?
The stock has formed an inverted hammer pattern following a sharp correction, indicating the possibility of a bullish reversal. Sentiment may improve, and the price could recover unless it breaks below the recent low of Rs 2,722.
Trent was one of the biggest gainers in the Nifty50 pack in the week. Do you see chances of more upside momentum ahead?
The sentiment might remain positive as the stock has moved above its previous swing high. On the higher end, a decisive move above Rs 8,330 could trigger a further rally. Support is placed at Rs 7,940.
Give us your top trading ideas of the week.
Buy GMDC at Rs 340. Target price: Rs 360/380. Stop loss: Rs 319
The stock has recently bounced back from several key reversal points on the weekly chart. Additionally, it found support at the 100-week EMA just before the recent rally. A bullish harami reversal pattern is also evident on the daily chart. The RSI shows a bullish crossover on the daily timeframe. With this technical setup, we can infer a positive outlook, potentially reaching 360/380 in the short term. Support is established at 320, and a break below this level would indicate weakness.
Buy KPIT Tech at Rs 1,789. Target price: Rs 1,920. Stop loss: Rs 1,734
The stock has moved back into a bullish zone by breaking through the rising trendline on the daily timeframe. The recent rally occurred after it held above the critical 100-day EMA. Additionally, the RSI has broken out of a falling trendline. With this technical setup, we can infer a positive outlook, potentially reaching 1920 in the short term. Support is established at 1734, and a break below this level would signal weakness.
Buy HUL at Rs 2,783. Target price: Rs 3,050. Stop loss: Rs 2,664
The stock has recently reversed from several key points on the daily chart. Additionally, it found support just above the 100-day EMA before the recent rally. A strong hidden bullish divergence is visible on the daily timeframe. With this technical setup, we can infer a positive outlook, potentially reaching 3050 in the short to medium term. Support is placed at 2664 (on a closing basis), and a break below this level would signal weakness.