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Nifty likely to face resistance at 10,500 levels: CapitalVia Global

Market overview and technical calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor

Topics
Markets | Market technicals | Nifty Outlook

Gaurav Garg  |  New Delhi 

Trading Strategy
We might witness strength in Nifty only if it breaks the level of 10,500

Nifty closed on a higher note; Technology stocks shine

The Indian traded with a positive sentiment last week on mixed global cues. Technology stocks rallied sharply which helped the index defend 10,300-mark on a weekly basis on Friday, however, banking stocks traded with weaker sentiments. Nifty closed above 10,300, which shows that the market is still in consolidation mode and needs to break 10,519 as 200-DEMA is placed there which might act as a critical level to break. Nifty managed to close at 10,383, adding 94.10 points. Technology and PSU Bank stocks closed on a positive note, but FMCG, realty, and pharmaceutical stocks closed in the red. Nifty bank closed at 21,592.05, adding 85.90 points from the previous day’s closing.

As per the weekly option data, handful of call writing on higher strikes ranging from 10,300 to 10,500 is seen which shows Nifty might witness resistance in subzone of 10,500. But, the index is likely to take support at 10,300 as maximum put open interest (OI is stands here after 10,000. We might witness strength in Nifty only if it breaks the level of 10,500. Therefore, traders should try to create short position keeping a close eye on 10,500, as it might act as a resistance for weekly expiry.

We can see a big momentum in following stocks:

Buy: Reliance Industries Limited (Above Rs.1751)

Target: Rs 1870

Stop loss: Rs 1690

The stock has taken support at its key moving average and is forming a bullish flag pattern and more thrust might be witnessed if the stock somehow breaks the level of 1,751. Further, the stock is witnessing resistance breakout, which might lead the stock to witness more upward movement. Considering the technical evidence discussed above, we recommend buying the stock above 1,751 for the target of 1,870, keeping a stop loss at 1,690 on a closing basis.

Buy: Limited (Above Rs.126)

Target: Rs 134

Stop loss: Rs 122

The stock took support from its important support zone on daily charts and is forming a reversal candlestick pattern. Further, it is witnessing resistance breakout from 126, which might lead the stock to witness more upward movement. We recommend buying the stock above 126 for the target of 134, keeping a stop loss at 122 on a closing basis.


Disclaimer: The analyst does not hold position in any of the stocks mentioned above.

First Published: Mon, June 29 2020. 07:59 IST
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