'Nifty could bounce back with immediate trading range of 10,700-11,000'

Shabbir Kayyumi

Last week, market breadth was largely in favour of bears and selling pressure was witnessed in every sector. Market is trading below its three major simple moving averages 20 DMA, 50 DMA and 200 DMA which are placed between 10,820 and 10,850 levels, suggesting strong resistance zone on the higher side.

Middle regression line of linear regression channel is placed around 10,850 levels, while a normal bounce back towards this strong confluence zone is awaited.

Majority of the momentum oscillators are in oversold zone creating the possibility of a bounce back.

Shabbir Kayyumi

Head of Technical & Derivative Research|Narnolia Financial Advisors

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Nifty has taken support from the lower support trend line of broadening wedge pattern which is in making since last two months, and mid-point of it is around 10,840 and any decisive move below the crucial support of 10,640 will push it at lower towards 10,500-10,350 levels.

At the same time volatility index, VIX has closed below 16 marks. Moreover, a decisive move above the stiff resistance of 10,860 will push it higher towards previous swing high 10,985.

Looking at the derivative structure, highest Open Interest (OI) in Put is seen around 10,700 strikes whereas maximum Open Interest (OI) in Call is around 11,000 levels, followed by 11,200. Option data indicates an immediate trading range between 10,700 and 11,000 marks.

Here are the top stock trading ideas which can give good returns:

Ashok Leyland: Buy above Rs 83 | Target: Rs 95| Stop Loss: Rs 75| Upside 14%

Ashok Leyland has seen a rebound after hitting a low of Rs 110 where its key support is seen. The emergence of a spinning top on the weekly chart is giving the possibility of pullback at a higher side in coming sessions.

RSI started curling up after testing its oversold zone and daily MACD in uptrend along with declining histogram in negative territory, supporting bullish bias in the stock.

We recommend buying Ashok Leyland above Rs 83 with a stop loss of Rs 75 and a target of Rs 95.

Karnataka Bank: Buy around Rs 110 |Target: Rs 122| Stop Loss: Rs 104| Upside 11%

On a weekly chart, the stock has taken support from its horizontal trough due to the concept of point of parity which indicates halt in the down swing of the scrip. On a daily chart, it took support from its rising trend line which gives buying opportunity in the scrip. Moreover, Bullish crossover in MACD indicates positivity in the counter.

Based on the above technical set up, we are expecting an upside momentum in the counter in the coming days for the target of Rs 122 levels with stop loss of Rs 104 marks.

One can buy the bank around Rs 110 with a stop loss of Rs 104 for the target of Rs 122.

State Bank of India: Buy around Rs 260 | Target: Rs 280| Stop Loss: Rs 249| Upside 8%

After showing a recent peak near Rs 307, the stock showed a sharp decline towards its previous trough where the principal of polarity indicate that scrip can bottom out at its lower levels.

Sustainability of prices above 200-week moving averages suggests a reversal is around the corner. Moreover, other indicators and oscillators are in an oversold zone which is also showing the possibility of a bounce back on up side.

One can take a long position around Rs 260 with a stop loss of Rs 249 for a target of Rs 280 levels.

Bajaj Auto: Buy around Rs 2800 |Target: Rs 3000| Stop Loss: Rs 2710| Upside 7%

The stock has been running in a falling channel from last few months after hitting the peak of Rs 3,468 and currently, it is trading above all its significant moving averages which create optimism among market participants.

Formation of a long bull candle after Hammer on weekly chart suggests a positive move on the upside. It also formed a Pole & Flag pattern on the daily chart which again giving an indication of bullishness.

By analyzing this price pattern, one can buy the stock around Rs 2,800 with a stop loss of Rs 2710 for the target of Rs 3,000.

The author is Head - Technical & Derivative Research at Narnolia Financial Advisors Ltd.