Strong support exists for Nifty at 10,900: CapitalVia Global Research

A short-covering move, along with addition of fresh position, is seen only if somehow Nifty sustains level of 11,200

Nifty reclaims 11,000 mark
 

Markets traded with bullish mode on the first day of October series on firm global cues. Volatility Index, India VIX, dropped 12.06 per cent and closed at 20.6750, which shows some relief to bulls as volatility is likely to come down. Nifty managed to close at 11,050.30, adding 244.80 points. IT, Auto, and private banks along with financial stocks traded with positive sentiments whereas no index closed in the red. Nifty bank closed at 20,982.35, adding 525.50 points from the previous day’s closing.

As per weekly option data, handful of put writing on lower strikes ranging from 10,800 to 11,000 is witnessed, which shows Nifty would face firm support in the sub 11,000 zone. The level of 10,900 might act as strong support as maximum put OI is placed here. We can witness short covering move along with addition of fresh position only if somehow Nifty sustains level of 11,200. Therefore, traders should try to create long position keeping a close eye on 11,000. 

We can see a big momentum in following stocks: 

Buy Dr. Reddy's Laboratories Limited (Above Rs 5,205) 

Target: Rs 5,465

Stop loss:  Rs 4,995

Rationale: The stock is forming flag pattern and sustaining above 5,200 might provide upside momentum. Breakout from the level of 5205 -- which is immediate resistance -- might lead the stock higher. The stock is sustaining above important moving averages. Considering the technical evidence discussed, we recommend buying the stock above 5,205 for the target of Rs 5,465, keeping a stop loss at Rs 4,995 on a closing basis.

Buy Polycab India Limited (Above Rs 837)

Target: Rs 895

Stop loss: Rs 797

Rationale: The stock is witnessing reversal from lower levels of Rs 800. Resistance breakout from the level of 837 -- which is immediate resistance -- might lead the stock higher. The stock is sustaining above important moving averages. Considering the technical evidence discussed, we recommend buying the stock above 837 for the target of Rs 895, keeping a stop loss at Rs 797 on a closing basis.