We spoke to analysts on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:
Analyst: Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities told ETMarkets
F&O data suggest long build up in HCL Tech
Nifty IT has strongly outperformed the frontline indices on Thursday as it has surged by nearly 3%. Relative strength comparison with Nifty 500 and Nifty 50 has reached over 20-days high. All the stocks from IT space were trading above its 20-day EMA level, which shows overall positive sentiments in IT stocks.
Among the constituents of Nifty IT, HCL Technologies witnessed a long build-up with the price surging 2.70%. While, cumulative OI of current, next and far series has surged by 7.09%. Talking about option chain, fresh call buying and call short covering is clearly visible on most of the strikes. At the same time, put writing is also visible on most of the strikes. This indicates overall bullish sentiment in derivative space.
Technically, the stock has given a Symmetrical Triangle pattern breakout on daily scale & is now trading at its highest level post January 2022. This breakout was supported by robust volume. Additionally, the stock has formed a sizable bullish candle on the breakout bar, which adds strength to the breakout.
All the moving averages and momentum indicators-based setups are indicating further bullish momentum. The leading indicator, daily RSI has surged above 60 mark for the first time after September 2023. Moreover, the stock has given closing above upper Bollinger Band, which shows strong bullish momentum.
These technical and derivative factors are indicating strong bullish momentum in stock. Hence, we recommend to accumulate the stock in the zone of Rs 1315-1300 with the stop loss of Rs 1270 on closing basis. On the upside, it is likely to test the level of Rs 1390, followed by 1430 in short-term.
Tata Motors gives horizontal trendline breakout
On Thursday, the stock gave a horizontal trendline breakout on daily scale. This breakout was supported by relatively higher volume. Interestingly, the stock registered a fresh all-time high. It has strongly outperformed the frontline indices inline with the entire auto sector.
Stock is trading above all its major short & long term moving averages which is suggesting strength in the stock even at higher levels.
The momentum indicators and oscillators are also portraying bullish picture for stock. Derivative data is also supporting the overall bullish chart structure as in the current week the stock has seen a short covering rally. Since Monday, the stock has surged by over 4% and cumulative OI has dipped by nearly 5%.
Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 720 followed by Rs 750 in the short-medium term. Stop loss can be maintained at Rs 658 on a 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 Economic Times)