We spoke to Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities, on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:
SAIL gives trendline breakout
Steel Authority of India’s (SAIL) stock has given a horizontal trendline breakout on the daily scale. This breakout was accompanied by robust trading volume, signalling substantial market enthusiasm. Moreover, the stock showcased a sizable bullish candle, reinforcing the optimistic momentum in the recent price action.
At present, the stock is positioned above both its short and long-term moving averages, both of which are on an upward trajectory and align favourably. This alignment indicates a robust and sustained trend. Additionally, the daily Relative Strength Index (RSI) is situated in the highly bullish zone according to RSI range shift rules. Furthermore, the daily Moving Average Convergence Divergence (MACD) remains bullish, residing above both its zero line and signal line.
On the derivative front, the January series future has surged by 7.60 per cent. The cumulative OI of current, next and far series has surged by nearly 3.32 per cent, which clearly indicates an overall long build up. A significant concentration of call open interest is evident at the 125 strike, closely trailed by the 130 strike, while substantial open interest on the put side is concentrated at the 120 strike. Delving into the option chain, there has been a discernible accumulation of long positions from 126 to 121 Call strikes. Conversely, on the put side, there is noteworthy put writing observed from 123 to 118 strikes. This clearly indicates bullish momentum in the stock.
Hence, we recommend to accumulate the stock in the zone of Rs 123-121 with a stop loss of Rs 118. On the upside, it is likely to test the level of Rs 129, followed by Rs 132 in the short-term.
Bharti Airtel chart portrays positive picture
The stock of Bharti Airtel has formed a High Wave like candlestick pattern on December 03 and thereafter it has witnessed a throwback. The throwback halted near 50-day EMA level and it has witnessed a smart recovery. In the last two trading sessions, the stock has witnessed a sharp upside rally along with above 50-day average volume, which is a bullish sign.
Presently, the stock demonstrates remarkable strength as it is currently trading 6.24 per cent above its 50-day Exponential Moving Average (EMA) level and nearly 10 per cent above its 100-day EMA level. The daily Relative Strength Index (RSI) indicates a bullish stance, and the stochastic is also signalling strong bullish momentum. Examining the daily timeframe, the Average Directional Index (ADX) is currently at 24.98 and is on an upward trajectory. The directional indicators affirm a ‘buy’ sentiment as the positive directional indicator (+DI) remains above the negative directional indicator (–DI).
The derivative data clearly signals significant short covering, with a 2.18 per cent surge observed in the January series future. Meanwhile, there is a nearly 2 per cent decline in the cumulative Open Interest (OI) across the current, next, and far series. There is a notable concentration of call open interest at the 1050 strike, followed by the 1100 strike. While significant open interest on the put side is observed at the 1000 strike. Talking about the option chain, from 1070 to 1030 CE strikes have witnessed long build up. While, on the put side, from 1060 to 970 strike have witnessed put writing. This clearly indicates bullish momentum in the stock.
Taking into account the aforementioned factors, there is a likelihood that the stock will exhibit outperformance in the upcoming trading sessions. The anticipated upward movement could lead to testing the levels of Rs 1090 initially, with a subsequent target of Rs 1110 in the short term. It is advisable to maintain a closing basis stop loss at Rs 995 to manage potential risks.
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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)