Market trades lower as coronavirus fear deepens; Nifty at 3-year low
Market traded with volatility after a gap-up opening on Wednesday, but failed to sustain at higher levels, as coronavirus fear deepened. Nifty hit its 3-year low and managed to close at 8468.80 slashing 498.25 points. Rupee remained weak and closed at 74.295. Private banks, financial services sector traded with negative sentiments whereas media stocks traded with green mark. Nifty bank closed at 20,580.20 slashing 1574.95 points from Tuesday’s closing.
As per weekly option data, handful of call writing on higher strikes ranging from 8,600 to 9,000 is seen which shows Nifty would face resistance in sub 8,800 zone. 9,000 will act as a strong resistance as maximum OI for the calls stands here. We can witness short-covering move along with addition of fresh position only if Nifty is able to breach 9,000. Therefore, traders should try to create shorts keeping close eye on 9,000 as it will act as a make or break level.
We can see a big momentum in following stocks:
Buy: Lupin Limited (Above Rs 638)
Target: Rs 678
Stop loss: Rs 605
Stock is forming an insider bar in daily charts, breakout above 638 would lead to bullish moment. Stock is showing sign of oversold on RSI indicator. Breakout from the level of 638 would lead stock to witness more upward movement.
Considering the technical evidence discussed above, we recommend buying the stock above 638 for the target of Rs 678, keeping a stop loss at Rs 605 on closing basis.
Buy: ITC Limited (Above Rs 153.60)
Target: Rs 172
Stop loss: Rs 144
Stock is forming a reversal pattern on daily charts along with forming inverted hammer candlestick. It is also showing signs of being over-sold on RSI indicator. Breakout from 153.60 would lead stock to witness more upward movement.
We recommend buying the stock above 153.60 for the target of Rs 172, keeping a stop loss at Rs 144 on closing basis.
Disclaimer: Technical Calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor. The analyst does not hold position in any of the stocks mentioned above.