Traders could continue to hold existing longs with trail stop strategy below 10,300

Sacchitanand Uttekar

Nifty shrugged off its indecisiveness and witnessed yet another strong day as it closed above its previous day's Doji formation. The index has been trending comfortably above its short-term averages of 5 and 20-DEMA, and marching towards its 200-DEMA placed around 10,530.

On the broader scale, its 61.80 percent retracement level of its previous fall from 12,430.50 towards 7,511.10 is also placed around 10,555. Its daily RSI is in close proximity of being overbought with a reading at 68.80 while its OI-PCR has jumped back to 1.62.

Most of its momentum indicators have been now placed in close proximity towards their respective overbought zone and its absolute price action on the daily scale deviating farther from its short-term averages.

With no sign of any reversal formation yet, momentum traders could continue to hold their existing longs with a trail stop strategy below 10,300 and review them once around 10,550-10,600 zone.

Here are three stocks for trading:

Buy IndusInd Bank

It is a strong sector performer alongwith a breakout above the critical level of Rs 500. The breakout is well supported with volumes & fresh open interest additions indicate momentum to continue further. Fresh longs could be added with a stop below Rs 505 for an upmove towards Rs 550.

Buy BASF

Fresh breakout from a cup & handle formation on the daily scale indicates the upmove to extend towards Rs 1,290-1,320 zone on an immediate basis. Trading longs should also be considered with a stop below Rs 1,110.

Buy SRF

Post consolidating around its 20 DEMA zone of Rs 3,600, the stock eventually witnessed a breakout. We expect the stock to witness a continued upmove towards its initial swing resistance around Rs 3,840. Short term longs could still be added with a stop below Rs 3,640.

The author is DVP – Technical (Equity) at Tradebulls Securities.