Day trading guide: Mild profit booking cannot be ruled out at higher levels

Amit Trivedi, YES Securities

Charting in the uncharted zone, Nifty surpassed 12,600 mark. Post gap up opening, Nifty erased most of its early gains. However, sustenance above 12,500 lifted the Nifty above the 12,600 zone. Banking and financials continue to lead the way, while IT and pharma index lost over 4 per cent. After Nifty’s recent surge of 9.6 per cent in seven sessions, mild profit taking cannot be ruled out at higher levels. On the flip side, levels of 12,350 could turn out as immediate floor.

Keeping recent series of higher highs and higher lows intact, Bank Nifty rallied 22 per cent from the recent low. Revised support zone for the Bank Nifty is now seen near 27,500. Most public banks ended in positive territory and any positive follow through could continue recent revival.

On the options front, massive additions are visible at 12,500 put and unwinding at 12,500 call. It represents a shift of band on the higher side. Snapping five sessions’ losing streak, India Vix jumped 8 per cent in today’s trade. It is likely to be within a band of 20-24 from a near-term perspective.

Future recommendation
Buy MGL (Mahanagar Gas) November future near Rs 855-851

• Stop loss: Rs 830
• Target: Rs 900
• Recent price structure shows gradual up move from the lower levels. The stock has managed to surpass the hurdle of Rs 850. Also, Daily RSI is sustaining above levels of 50, which adds credence to positive outlook for the stock.

Option recommendation
Buy Federal Bank November 60 strike call near 1.80

• Stop loss: 0.60
• Target: 3.50
• The stock is underperforming significantly in the current year. However, in the recent past, it has gained some traction on the upside. Swift recovery from the lower levels with sustained move above short-term averages is likely to lift the stock till Rs 63-64 zone.

Equity recommendation
Buy AU Small Finance Bank near Rs 855-850

• Stop loss: Rs 800
• Target: Rs 950
• Post a few weeks’ consolidation above short-term averages, the stock resumed its upward trajectory. Short-term momentum oscillators have turned up in collaboration with stocks' recent up move, thereby confirming the upside momentum.

(Amit Trivedi is CMT, Technical Analyst - Institutional Equities, YES Securities)