Day trading guide for Tuesday

ICICI Securities

Analyst Name
Dharmesh Shah - Head Technical

The weekly price action formed a bear candle with a lower high-low after a sharp rally of 11% in one-month (10790-12025) indicating profit booking around the psychological 12000 mark. Historically, volatility has remained elevated during US Presidential Election. During such a volatile phase we expect the Nifty to find strong support around 11000-11200 range as it is confluence of the 100 days EMA and 80% retracement of Sept- Oct rally (11790-12025).

We expect the Nifty to hold above the crucial support area post US election outcome. Therefore, any dips from here on should be capitalised as an incremental buying opportunity as the medium term structure remains positive

Analyst Name
Dharmesh Shah – Head Technical

F&0 Strategy
Head Derivatives- Raj Deepak Singh

F&0 Strategy:

Buy Federal Bank

• CMP: 51.75
• Target: 56
• Stop loss: 47.8

Rationale:

• Banking stocks are exhibiting significant out performance in last few weeks as profit booking is seen among weakness seen in technology, pharma and energy stocks. Stocks like Federal Bank have witnessed a round of profit booking after its quarterly results. Currently stock is trading near its major Put base indicating expectations of limited downsides.
• At the same time, the open interest in the stock has risen continuously since last month as fresh longs are added in it. We believe ongoing positive bias should take the stock higher towards 58 levels in the days to come.

Short Butterfly Strategy
Bharti Airtel

Strategy:

• Short Bharti November 450 Call and 450 Put at cumulative premium of 40-42
• Buy November 480 Call at 9-10
• Buy November 420 Put at 7-8

Rationale:

• Bharti Airtel has been extreme volatile in last couple of months and the current option premiums are reflecting the same. The current options premium for ATM strike is almost 10%, which covers the range of almost 40 points from current levels. However, to protect from unwarranted sharp moves in either directions, we advise forming short butterfly spread.
• One can sell ATM Call and Put strikes of 450 for November series and at the same time to protect sharp directional moves, buying in deep OTM options are recommended where once can buy 480 Call and 420 Put for the current series.

Forex Strategy:
Analyst: Raj Deepak Singh, Head-Derivatives

Buy USDINR
Buy USDINR at 74.30 – 74.35

• Target: 74.80
• Stop loss: 74.10

Rationale:

• Due to weakness in Euro, Dollar index moved above 94 levels ahead of the US presidential election.
• Closure in OTM Calls and strengthening of Dollar index are likely to keep the INR move in check.

Buy GBPINR
Buy GBPINR at 96.10-96.20

• Target: 96.80
• Stop loss: 95.80

Rationale:

• Rise in Dollar index was mainly due to weakness seen in Euro due to fresh lock-down.
• Short covering seen in GBPINR pair and we feel the pair is likely to head towards 96.80 levels in coming days.