F&O Stock Strategy: How to trade IHCL, Hindalco and Bharat Forge on Tuesday

The Indian market cheered the five state election results on Monday with both Nifty and Nifty Bank reaching their all-time high levels. Taking a cue from the political developments and the market reaction from 2019, Nifty looks poised for a big rally until the run-up to the general elections of 2024. As a broader market rally is expected, here are three stocks that have formed a strong setup for further rally on the charts giving a good risk-reward ratio.

Analyst: Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy

Hindalco – Cup and Handle Pattern Breakout

Rs 500 was a big resistance for Hindalco and the stock has been trading below it since April 2022. The stock decisively crossed this level with good volumes the previous month forming a cup and handle pattern and has been holding above it since then. The daily RSI is at 69 indicating its bullish momentum with good upside potential. An upmove from here can push the stock to its next resistance level in the next 4-5 weeks On the derivative front, huge writing was seen on the put side with significant open interest at the strike prices of 520, 510, and 500. The max pain is at 515 indicating the interest of the bulls. Based on the technical analysis and Open interest, the stock can see the level of 550 in the short term. The stop loss can be placed at 498 on a closing basis

The Indian Hotels Co. – All-Time High Resistance Breakout

Indian Hotels has been on an upward momentum since April 2021 reaching an all-time high of 436. The stock corrected about 14% from there but for the past one month, the stock has been on an upmove. Indian Hotels has given a breakout from this level with good volumes.The daily RSI is at 72 depicting a good upside from here. Seeing the option chain, writing was seen on the put side whereas huge buying on the call side. The max pain is at 425 indicating the stock should not go below this level. For the short term, IndHotels can be bought with a target of 449 and a stop loss of 424 on closing basis.

Bharat Forge – Inverted Head and Shoulder Breakout

Bharat Forge traded in the range of 620-900 for about two years before giving a breakout of this level in July this year. It reached the price level of 1150 and corrected about 14% from there.

In November, Bharat Forge rallied to cover the entire fall it made during the correction forming an inverted head and shoulder pattern. On Friday, the stock gave a breakout from this level with good volumes forming a strong daily candle. The daily RSI is at 71 depicting the bullish momentum.

On the derivative front, although huge writing was seen on the put as well as call side, fresh new sell positions were created on the put side whereas call writers reduced their position depicting the conviction of the bulls. So for a short-term, Bharat Forge can be bought with a target of 1220 and a stop loss of 1128 on daily closing basis

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)