Reliance Securities sees resistance for Nifty around 11,650; can initiate longs on two-wheeler stocks

Reliance Securities

The market witnessed profit booking from 11,400 levels as mentioned last week. The RBI increased interest credit policy rate by 25 basis points to 6.5 percent, which put pressure on the banking stocks and further corrective action was accentuated with respect to the weekly expiry for Bank Nifty.

The earnings week remained mixed with disappointments from Tata Motors, Indigo, Tata Global and Ramco Cement, while there was positive price action in stocks like BEL, Apollo Tyres, MGL, Torrent Pharma post results. Indian auto companies have delivered a mixed volume performance in Jul’18 on different base of last year led by GST-led uncertainty.

Strong rural pick-up and ongoing positive sentiment lifted 2W sales, while healthy transportation activities continued to boost CV volume. On the other hand, PV sales were subdued for most players.

Nifty has ended flat to positive by 0.7 percent higher, while midcap and small caps outperformed to gain by 1.8 percent and 2.4 percent, respectively for the week. Among sectors PSU Banks, Pharma and Energy were up by 4.7 percent, 5.1 percent and 3.5 percent, respectively for the week. Auto sector was the only loser to decline by 0.6 percent down w-o-w, while other sectors like FMCG and Realty gained by 2.2 percent and 1 percent, respectively

The call options OI data for Aug’18 are very low as the index is trading at an all-time high. Quarterly results of some large & mid-cap stocks are pending, which we expect to provide a new direction to the broader markets.

On the higher side, the monthly pivot resistance is placed at 11,650 levels, while the immediate support is seen at 11,000, as it has the highest put OI positions of 49 lakh shares. One may look to initiate longs in two-wheeler stocks for reasonable upside, as the risk reward appears to be favourable at current levels post correction over the past few weeks.

HCL Technologies Ltd

CMP: 964| RECO: BUY| TARGET: 1050-1100| STOP LOSS: 925

The stock is holding its 21 month support and witnessing positive momentum from lower levels signaling turnaround, which will help to cross the last month’s high.

Due to recent turnaround, the key technical indicators reversed from their lower levels and on the verge of a bullish cross-over, signaling probable up-move in the stock.

In case of any decline, its 21-month moving average will continue to work as a key reversal point for the stock.

Thus long position can be initiated here for the target of Rs1050-1100 with a stop loss of Rs 925.

Vedanta

The stock ended on a positive note for straight second week in a row after recovering from its 52-week low, where volume was relatively higher.

The key technical indicators are positively poised above their averages, signaling strength in the stock.

We believe the stock will continue undergoing up-trend and will manage to recover prior damages.

Thus long position can be initiated here for the target of Rs250-260 with a stop loss of Rs 200.

Zee Entertainment

CMP: 521| RECO: BUY| TARGET: 550| STOP LOSS: 494

The stock has formed base around prior low connecting support line, signaling near-term turnaround.

RSI reversed from its bull market support zone and Stochastic reversed from its oversold zone, are also coinciding with our view.

We believe the stock will soon resume its northward journey and will recover prior damages.

Thus long position can be initiated here for the target of Rs550 with a stop loss of Rs 494.