We expect Nifty to continue its consolidation within the range of 11,550-11,710. The occurrence of “Bearish Engulfing” candle formation at the beginning of the week and the follow through move on the downside suggests short term top might be in place. OI concentration band for the current weekly expiry stands at 11,600-11,800 complimenting the expected range. Prevailing negative divergence relative to price for daily RSI oscillator in conjunction with approaching expiry suggests upside might be capped on immediate basis. Only a move below 11,450 could be detrimental from here on and could mark the commencement of a larger corrective move towards 11,300. Until then expect ranged action within short term. Traders are advised to retain their short positions till 11,520 support is tested and exit only in case 11,710 is violated on daily closing basis.
CMP: Rs 159.50
The occurrence of a ‘Morning Star’ formation on the monthly scale followed by a continuation pattern on the short term scale augurs well for a sustainable bullish trend to prevail. The congestion zone near its 200-DEMA around Rs 159 with rising volumes supports the expectation of a breakout from the immediate congestion. The continuation pattern /bullish flag indicates short term targets close to Rs 176, followed by Rs 184 which could be achieved in a couple of weeks. Traders should hold the stock with a stop below Rs 150 and review once around the target zone.
Stock: Larsen & Toubro
CMP: Rs 1,371.55
The stock is retracing lower post around 18 per cent rise from its February lows around Rs 1,200 levels. Prices tested its 20-DEMA on the downside for the four consecutive trading sessions with deteriorating momentum suggests the ongoing corrective move is expected to continue lower till support levels of Rs 1,340 in coming sessions. Call writing continues at Rs 1,400 strike along with negative price action indicating the upside capped for the stock in short term. Short term traders can initiate short position with stop above Rs 1,388 levels for Rs 1,340 to be obtained in coming sessions.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.