Day trading guide: Bank Nifty needs to sustain above 31,500 to keep near-term outlook positive

Day trading guide: Bank Nifty needs to sustain above 31,500 to keep near-term outlook positive

Amit Trivedi, YES Securities

After a series of positive closes, bulls took a pause on Wednesday. After registering a record high of 14,244, the Nifty failed to sustain above levels of 14200. Nifty’s decline took the form of a bearish candle with a close near midpoint of the previous bullish candle. Appearance of this pattern at current juncture could mean profit taking at higher levels, while negative follow through could attract some consolidation/pullback towards the 14,050 zone.

Meanwhile, continuing the prior session’s uptrend, the Bank Nifty rallied till 31,982. However, inability to surpass 32,000 erased early gains and eventually Bank Nifty witnessed indecisive candle formation. Follow-up action needs to be closely watched as sustenance above 31,500 is essential for Bank Nifty to keep near-term outlook positive.

Sectoral trend turned mixed. India Vix gradually moved up, reclaiming levels of 21.

The NiftyAuto index retreated after retracing almost 2/3 (i.e. 66.66%) of the 2018-2020 year decline. Negative follow through in this space could attract some profit taking or consolidation in auto stocks.

Equity recommendation

Buy Torrent Power near Rs 326

  • Stop loss: Rs 310
  • Target: Rs 355
  • Forming a large bullish candle, the stock has witnessed congestion breakout on a comparatively higher volume. Positive follow through could lift the stock towards Rs 350 plus levels.

Derivative recommendation

Sell Apollo Tyre January future near Rs 187

  • Stop loss: Rs 190.5
  • Target: Rs 180
  • Retracing 61.8% of the previous decline, the recent rally stalled near levels of Rs 190. Negative follow up could attract mild pullback till Rs 180 zone.

Amit Trivedi is CMT, Technical Analyst – Institutional Equities, YES Securities. Views are his own.)

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