Day Trading Guide: 2 stock recommendations for Monday

The last few days have been notably different. On Thursday, the Nifty broke the support of 16,800 and corrected to 16,203. While on Friday, it reclaimed levels of 16,700 but failed to provide a close above the prior session’s high.

Nifty slipped below its Dec 2021 low, however, it managed to defend its yearly mean on a closing basis. Looking back, levels of 52-week SMA (i.e. yearly mean) are intact on closing since Aug 2020. Sustenance above 16,450 (i.e. midpoint of Thursday’s bearish candle) is essential for any stability to emerge.

However, an immediate hurdle is seen near the 16,800-16850 zone and a decisive breakthrough above for the same is important to gain positive traction.

All the sectoral indices ended in the green, also India Vix cooled off by 17%. Going ahead, a mixed trend is possible among the sectoral indices.

Series of ascending lows are still intact on medium charts of the auto index. Hence, stability at current levels could attract some buying interest in selected stocks.

Recommendations

ALEMBIC LTD
Buy near Rs 82.5
Stop-loss: Rs 76.5
Target: Rs 93

After losing 34% from the prior month's high, the stock has reclaimed levels of 80. Sustenance is likely to attract short term reversal till 93 zone.

ITC
Buy March call option near Rs 5.5
Stop-loss: Rs 1.5
Target: Rs 14

The stock rebounded off its multi-month support. Positive follow-up action to bullish candle could mean that the stock is due for mean reversion.

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