Day trading guide for Tuesday

ICICI Securities

Market outlook
Analyst: Dharmesh Shah, Head Technical

The weekly price action formed a sizable bull candle carrying higher high-low and a bullish gap below its base (13,777-13,811), signalling continuance of positive bias. The risk on sentiment prevailed across global equities as dollar weakness extended. The index is set to test our earmarked target of 14,200 in the coming week supported by revolving sectoral participation and strong market breadth. As currently all the Nifty constituents are trading above their 200-day SMA, it augurs well for longevity of the bull trend. Key point to highlight is that the Dollar index has formed a fresh 32-month low (89.5) and has given a weekly closing below key support threshold of 90 for the first time since April 2018, auguring well for emerging markets. We believe this buoyant development would help the Indian market to extend the current rally.

Analyst Name: Dharmesh Shah – Head Technical



F&O Strategy
Analyst: Raj Deepak Singh, Head - Derivatives

Buy Lupin

• CMP: Rs 1,026
• Target: Rs 1,075
• Stop loss: Rs 1,000

Rationale:
Lupin has been an underperformer with respect to the market and saw significant long liquidation in the last couple of months. On the first day of the January series, the open interest in the stock increased 8% with price action indicating build-up of fresh positive bias in the stock.
The stock has started trading above its highest Call base of 1000 strike, which is likely to trigger a further up move in the coming sessions.

Buy Muthoot Finance

• CMP: Rs 1,244
• Target: Rs 1,300
• Stop loss: Rs 1,210

Rationale:
On the F&O front, leveraged positions in Muthoot Finance have declined considerably in the last two months as stock prices remained subdued and were unable to perform in line with the market. Despite sharp closure, the stock has been able to surpass its trading range, indicating prevailing positive bias in the stock.

The Delivery Z score reading in the cash segment indicates there is still room for further delivery pick-up in coming days. In due course, an up move should pan out in the stock

Forex Strategy:
Sell USD-INR

Sell USD-INR at 73.70 – 73.80

• Target: 72.90
• Stop loss: 74.25

Rationale:
The rupee continued to appreciate last week on the back of positive inflows and weaker dollar index.
Stronger domestic equities along with a weaker dollar index supported the rupee and kept the pressure on the pair. We expect the rupee to appreciate further towards 72.90

Buy GBP-INR

Buy GBP-INR at 99.80-99.90

• Target: 100.8
• Stop loss: 99.3

Rationale:
GBPUSD is finding support near 1.34 level as the UK and EU agree on historic trade deals.
GBP-INR sustained above 100 levels and is likely to rise further amid strong rebound in cable currency.