As expected, break below 11,450 levels led to commencement of larger corrective move towards 11,300. Gap down opening followed by incremental momentum to the downside led to a breach below 50-DEMA (double exponential moving average) which indicates weakness to prevail in the coming sessions. Daily RSI has been quoting below 50 and is now is approaching oversold zone.
Significant call writing at 11,500 strike price suggests the levels could act as a hurdle on an immediate basis. Elevated VIX along with sustained call writing at higher strikes indicates upside to cap on an immediate basis. Short term traders should refrain from initiating fresh shorts as most short horizon oscillators are now approaching their respective oversold territory. It will be prudent to hold on if any shorts with trailing stop loss above 11,520 levels and review the same as index approaches its support zone around 11,300-11,330.
CMP: Rs 522.65
Stock is moving lower post an unsuccessful attempt at breaching above its double top resistance levels of Rs 560 in recent past. It is trading in a broad range of Rs 508-560 in medium term and post test of the higher end of the range; it is expected to target its lower end of the range around Rs 508 levels. Breach and close below its 50-DEMA augurs well for shorting the stock in short term for retest of the lower end of broader range with a stop placed above range mean of 532 for 508 to be obtained in coming sessions.
CMP: Rs 2,657
It has undergone sustained downtrend in recent past leading to shorter horizon oscillators in oversold zone. Appearance of “Bullish Hammer” on Daily scale along with hourly scale oscillators prevalent “Bullish Divergence” could lead to technical short covering bounce in the stock in the coming sessions. The stock can be bought for technical bounce till Rs 2,860 levels with closing stop placed below Rs 2,560 in coming sessions.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.