F&O data indicates positive market sentiment, here are 2 stocks to buy
The benchmark Nifty has moved deeper into the gains as the bulls took the index above 18,000, following a Head and Shoulder pattern on the daily timeframe. The current rally was well-predicted by the writers, as they had a decent short PE position at the 17,800 strike price. On the higher end, less significant short CE built up at the higher strike prices was visible. On the higher end, Nifty might continue its upward journey till it holds above 18,000 on a closing basis. Resistance on the higher end is placed at 18200, above which a further rally might come.
Meanwhile, the Bank Nifty continues to remain in the strength despite the subdued move from the most heavyweight. The index has remained above the consolidation breakout point on the daily chart. Besides, the index has remained above the critical moving average. The trend will likely to remain positive as long as it remains above 43,000 on a closing basis. On the higher end, Bank Nifty might move towards 43,300/43,500 over the near term.
The May series has started with a waning bearishness as traders rolled over lesser short position into the May, following a decent short unwinding in the April F&O positions. The rollover into May was lower than the last three months average rollover. The May series started with significantly lesser open interest as compared to the same at the start of April series. The lower open interest coupled with higher cost of carry indicates a bull case scenario of the May series. A sharp fall in the fear index, India VIX, also indicates improved positive market sentiment.
Buy SBI at ₹576; Target: ₹610; Stop Loss: ₹558
The stock has moved above the previous swing high, suggesting a rise in optimism. Besides, the stock has moved above the given a brief consolidation breakout on the daily timeframe. The daily RSI has given a breakout above the previous swing high. Over the short term, the stock is likely to move towards 610. On lower end, support is placed at 558.
Buy IRCTC at ₹617; Target: ₹660; Stop Loss: ₹600
The stock has given a consolidation breakout on the daily chart, suggesting a rise in optimism. Besides, the stock has moved above the critical near-term moving average. The daily RSI is in a bullish crossover and rising. Over the short term, the stock is likely to move towards 660. On the lower end, support is placed at 600.
The author, Rupak De is Senior Technical analyst at LKP Securities
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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