Day trading guide: Outperformance of broader indices likely to continue

Amit Trivedi, YES Securities

Post Wednesday’s pause, the Nifty reclaimed levels of 14,200 and registered a fresh record high of 14,256. However, after marking day’s high in the morning trade, Nifty traded beneath 14,250 zone through the rest of the session. Nifty’s high/low range was confined to 133 points, forming NR4 chart pattern (i.e. narrowest daily range when compared with prior three sessions range). Eventually erasing early gains, Nifty entered in the negative territory.

Throwback from higher levels indicates lack of required momentum on the upside post gap up opening. Sustenance above 14,200 is essential to continue journey at uncharted zone, while negative follow through is likely to attract mild pullback till 14,000.

The Bank Nifty surpassed levels of 32,000. However, even the Bank Nifty traded within a narrow range and formed another indecisive candle. Meanwhile, focus was shifted to broader indices. Both the Midcap100 and Smallcap100 index rallied 2%. Ongoing outperformance of the broader indices is likely to continue.

Equity recommendation

Buy Kalpataru Power near Rs 333

• Stop loss: Rs 319
• Target: Rs 362
• The bulls regained momentum after a few days of consolidation. Appearance of bullish candle with close near day’s high ensures shift of range on the upside.

Derivative recommendation

Sell Kotak Bank January future near Rs 1,965

• Stop loss: Rs 1,995
• Target: Rs 1,900
• Since the start of this month, the stock is gradually trending lower, finding resistance near the Rs 2,000 zone. Inability to hold current levels could drag the stock lower till Rs 1,900 zone.

( Amit Trivedi is CMT, Technical Analyst - Institutional Equities, YES Securities. Views are his own.)